Town Square

Menlo council set to impose two-tier pension system

Original post made
on May 4, 2010

As the bureaucratic gears start turning to verify a citizen-led "pension reform" ballot initiative, Menlo Park's City Council looks set to impose a "two-tier" pension system on the city's largest union, similar to the one in the initiative.

Posted by Hank Lawrence
a resident of Menlo Park: Sharon Heights
on May 4, 2010 at 1:39 pm

It think it is ironic that the City workers are violently opposed to a proposed pension that almost every private sector employee would be ecstatic to get. This proposed pension is better than the Federal pension before it went to social security.

The Menlo Park City employees have a lot of chutzpah to think that retirees scrapping by on Social Security should make more austere cuts in their standard of living so that Menlo Park City employees can retire living high on the hog.

Enough is enough. This is the type of thinking that drove U.S. manufacturing offshore. The economic viability of Menlo Park is more far important than city employess retiring in pampered luxury.

Posted by I signed the petition
a resident of Hillview Middle School
on May 4, 2010 at 3:58 pm

This story illustrates why the reform initiative is stronger than council action. Council, e.g. MS. Fergusson, swayed with the political winds and now supports two tier. What new information changed her mind except the apparent voter revolt as evidenced by the speed by which the petition organizers gathered 3,100 signatures? Politicians often have no idealogy beyond the next election.

Posted by Fed up with overpaid city workers
a resident of Menlo Park: The Willows
on May 4, 2010 at 10:09 pm

Ditto for John Boyle....

This story illustrates why the reform initiative is stronger than council action. Council, e.g. MS. Fergusson, swayed with the political winds and now supports two tier. What new information changed her mind except the apparent voter revolt as evidenced by the speed by which the petition organizers gathered 3,100 signatures? Politicians often have no idealogy beyond the next election.

Posted by i'll take it
a resident of Menlo Park: Belle Haven
on May 4, 2010 at 11:06 pm

I'll take that $80k job. I'll bet if they advertised it outside their inner circle, they'd get dozens of qualified applicants. Of course, many would have private sector experience, which I realize may be anathema to our city manager. Heaven forfend the city hire someone who knows how an organization should be run!

Posted by steve bruni
a resident of Menlo Park: Stanford Hills
on May 5, 2010 at 6:40 am

Its about time the city stands up the the unions .they ruin every company they are involved with car,steel,citys what more do they want go out and make it on your own,try hard work you will be rewarded...........you cant take take and take

Posted by POGO
a resident of Woodside: other
on May 5, 2010 at 9:23 am

Steve Bruni -

The problem is not just unions. They don't "ruin every company." And remember, the vast majority of our public workers work hard and do a great job.

It would be a HUGE mistake to ignore the role of your elected officials in this predicament. Our Council Members are on the other side of the bargaining table and they simply aren't doing their job when the acquiesce to the other side. I find it hard to fault workers for trying to get everything they can - you and I do that, too.

I do, however, find fault when our officials grant workers these unsustainable benefits and then wonder why they can't balance their budget! Taxpayers are ALWAYS left paying for their poor judgement.

Posted by Transparency
a resident of another community
on May 5, 2010 at 4:25 pm

Every Recession has it's scape goats and we are now your scape goats. The working class unionist laborer. Thanks people and City Council of Menlo. We will bare the burden as we often do. Unions bring voice to those who once had none, they are not a bad thing. Maybe the reason we have a decent pension is because of organized labor that looked out for it's members and gave them a living wage. What I see in this country is plain and simple envy and greed. Maybe if the 48% of us that belong to Unions had none we would be in poverty and not middle class Americans (Hah! the middle class).

My Father warned me before he passed on that you have to scratch and fight for everything you get in life and that someday someone will try to take that away from you. Well guess what we have not bankrupt the system it is you Wall Street, The Banking System, The Health System, The Oil Industry and Politico's. From where I sit it looks like the private sector needs a kick in the A**. Mostly because greed rules what you do. I got into public service because I liked the Idea of looking out for my fellow citizen's and there best interest, but I never expected to be turned on by the people I set out to look out for. Shame, Shame, Shame on you.

At least one thing is true, My Father God rest his soul does not have to be a witness to what people have turned into. You are not a community but a people only interested in themselves. May God forgive you for your actions. Go ahead and try to make me feel bad about who I am and what I do, you won't succeed, but try.

Posted by Lee Weaver
a resident of Menlo Park: University Heights
on May 5, 2010 at 4:37 pm

If your union is made up of government employees then you work for us, the taxpayer. We are your employer. We don't want to pay you these outrageous pensions anymore- we don't have to and we're not going to. If you don't like it, quit and find another job.

Posted by I'll take it
a resident of Menlo Park: Belle Haven
on May 5, 2010 at 5:57 pm

And now the whining begins. First, given that some of you unionites seem unable to write a single sentence without making ridiculous grammatical errors, I doubt you could even get a job in the private sector. Second, some of you have reading comprehension problems. NO ONE IS TAKING AWAY YOUR BENEFITS. Got it? By the way, you didn't "earn" those generous pensions but were awarded them when a 2007 council agreed to a modification that gave you a windfall.

New hires will be getting a fine salary, terrific benefits, and a better retirement package than those of us in the private sector. The only thing they won't be getting are those windfall retirement benefits.

Finally, the comments about "people only interested in themselves" is kind of ironic given your greed. You care nothing about the community that you allegedly serve or the difficulties that many of us -- who can be downsized out of a job or given a reduction in salary -- are encountering. You care only about getting to retire at a young age with a lot of our money that you can spend on yourself and yourself only. And you expect our pity? Pah.

Posted by Fact Vs. Myth
a resident of another community
on May 5, 2010 at 6:40 pm

Myth: Public pension benefits are excessive and a drain on the public.
March 15, 2010

Fact:
The average CalPERS pension is about $25,000 per year. Half of CalPERS retirees receive $16,000 per year or less in benefits. Unlike the private sector, many CalPERS members do not receive Social Security, making their CalPERS pension their sole source of pension income, other than savings.

Fact:
Seventy-eight percent of CalPERS retirees receive $36,000 per year or less. School pensioners in the CalPERS program receive on average $1,079.00 a month.

Fact:
Only 1 percent of the nearly half million CalPERS retirees receive annual pensions of $100,000 or more. Many are retired non-unionized or specialized skilled employees or other high wage earners who worked 30 years or more. Many served in high-level management positions.

Fact:
CalPERS pensioners help stimulate the economy. A study found that pension income to 674,000 CalPERS and CalSTRS retirees generated an economic impact of $21.1 billion to the State's cities and counties. The economic footprint of retiree spending rivaled that of the hotel and accommodations industry of the State in 2006. In all, California public retirees put back $2 into the economy for every $1 they receive in pensions.

Myth: Pension Costs for the State of California have increased by 2000 percent in the last 10 years.
March 15, 2010

Fact:
This statement compares a time when the State paid little or nothing during years of robust investment earnings and took a pension holiday to the recent market cycle extremes and current economic downturn.

Fact:
In 1981-82, pension contributions for the largest category of employees cost the State 19.6 percent of payroll. For the current 2009-10 fiscal year the state is paying 16.9 percent.

Fact:
The State of California pays less as a percentage of payroll today than in did in the early 1980s.

Myth: CalPERS said the SB 400 benefit enhancements would be free to the State forever.
March 15, 2010

Fact:

SB 400, passed by the State in 1999, was the first change in benefits to State employees in 30 years. It was a result of contract negotiations between public employee unions and the Governor and followed four years without a pay raise. The CalPERS-sponsored improvements were designed to resolve inequities in the System. CalPERS priced the cost of the benefit enhancement at $400 - $600 million (equal to a 2 percent pay raise.)

Years of double-digit returns reduced employer contributions to zero for a short time. At that time, CalPERS plans were extremely overfunded, and funding surpluses were expected to cover the additional costs if investments met the actuarial assumed rate of return. No one predicted the calamitous economic events of 9/11, severe stock market fall, or the systemic regulatory failure that has rocked financial markets worldwide.

There are many other public accounts of the cost of SB 400 benefits. The Los Angeles Times reported in 1999 that the cost of SB 400 could be $600 million; and CalTAX, in a letter to the Legislature, reminded lawmakers that if markets were to falter severely in the future, employers would again be paying more in contributions.

Myth: CalPERS is going to run out of money because of baby boomers retiring.
March 15, 2010

Fact:
CalPERS began putting away money for the baby boomers the day they first came to work for government. CalPERS plans are prefunded and contributions are received in every year that members accrue their benefits. The retirement of baby boomers has already been reflected in the rates using actuarial assumptions. The money needed to pay benefits for retirees is expected to be there when workers retire. CalPERS is expected to be able to keep up with baby boomers retirements and the expected increase in benefit payments.

Myth: Pensions are among the highest costs of State government.
March 15, 2010

Fact:

Forty-one percent of the State general fund budget is earmarked for public education, 12 percent for higher education, and 10 percent for corrections. The cost of pensions is about 2.5 percent of total State spending.

Posted by Fact Vs. Myth
a resident of another community
on May 5, 2010 at 6:50 pm

Myth: Government workers don't contribute to their pensions; taxpayers are on the hook to pay those costs.
January 12, 2010

Fact:
All government workers contribute to their CalPERS pensions. For state employees, the range is five to eight percent of their monthly earnings; for public agencies it is five to nine percent. While the vast majority pay five percent, firefighters, peace officers, and the CHP pay eight percent.

Myth: CalPERS pensioners can "goose" their retirement benefit upward by manipulating the income that gets included in their final year of compensation.
September 23, 2009

Fact:

In 2003, SB 53 was adopted into law which greatly restricts the type of compensation allowable, and it reduces potential for enhancing final compensation in order to increase pensions. CalPERS has authority to investigate and prosecute pension fraud. Our internal investigative systems help protect against "pension spiking."

Myth: The average CalPERS pensioner gets 80 percent of their pay.
September 23, 2009

Fact:

The average CalPERS member receives 50 percent or less of their pay in retirement.

Fact:
The State constitution does not give the CalPERS Board of Administration power to set benefits. Legislative policy standards adopted by the CalPERS Board say CalPERS will be neutral or have no position regarding "proposals to change retirement benefits which are appropriately subject to collective bargaining and are consistent with other board policies."

Myth: Police and firefighters retire at age 50 with 90 percent of pay.
September 23, 2009

Fact:

Our records indicate that over the last seven years, safety workers who retired at age 50 with 30 years of service represented 1 percent of all those retired. The reason very few ever would receive this level pension is that they would have had to start working age 20 to earn 30 years. Most start their safety careers at age 27, 28, or 29.

Twelve percent of all public safety members are subject to the 3 percent at age 55 formula. They would need 37.5 years of service at age 50 to get 90 percent, and would have had to start working at age 12.5 to earn 37.5 years. And 7 percent of all public agency safety members are subject to the 2 percent at age 50 formula. They would need to have 45 years of service at age 50 to get 90 percent, and would have had to start working at age 5 to earn 45 years.

Myth: CalPERS cannot come back from billions in losses.
September 23, 2009

Fact:
At the market's lowest point in 2008, CalPERS assets had dropped by $100 billion. Today CalPERS has regained $40 billion in five months, and in September, its market value of assets returned to the $200 billion mark. In the last 24 years, CalPERS has had 20 years of positive returns, 16 of which were 10 percent or greater. Our Chief Investment Officer said no one knows when the markets will return, but experts believe markets are improving.

Fact:
This year, we reduced our public stock allocation not because we have lost confidence in stocks, but in part to make more assets available for private equity. We believe private equity will outperform stock earnings by at least 3 percentage points. Private equity is the strongest long-term performance of an asset class in our portfolio.

Fact:
Our 77-year investment records show that CalPERS portfolio gains significantly increased when the Board removed restrictions on global stock investing in the mid-1960s. Since then, annual portfolio growth increased sharply with the notable exceptions of the two recessions of the current decade.

Fact:
Our consultants affirmed the soundness of our risk position in June 2009, when the Board revised our asset allocations and risk management strategies. Our biggest on-paper losses, by far, were in public stocks that historically aren't considered as risky as private equity and real estate, two asset classes that have out-performed stocks the past decade. In fact, the Board's new asset allocations slightly lowered the risk of the overall portfolio. It raised the target for private equity from 10 to 14 percent of the portfolio, and reduced the proportion of stocks in the portfolio.

Fact:
We assume an average annual return on investment of 7.75 percent  the target that we need to hit to fully fund members' pension benefits. Two of our leading consultants  Wilshire Consulting and Pension Consulting Alliance  reaffirmed our investment assumptions when they recommended adoption of our revised asset allocation in June.

Myth: CalPERS is doing very little to manage its real estate portfolio.
September 23, 2009

Fact:
CalPERS is like many investors who have experienced investment declines as a result of the systemic market downturn. The volatile markets are contributing to challenges in real estate investments for large and small investors, and the economic downturn continues to impact the real estate sector.

Fact:
Vacancy rates are increasing in the commercial real estate sector and the downturn in the markets had an impact on housing values, causing a significant price correction.

Fact:
We are positioning our real estate portfolio for long-term growth and focusing on income-producing properties that provide stable cash flows. We have a responsibility not to invest additional dollars in underperforming assets and we will replace underperforming assets, with an eye toward the right investments to sustain the portfolio for the long term.

Myth: CalPERS is shying away from stocks in favor of private equity.
September 23, 2009

Fact:
While bonds have out-performed stocks in this decade, short-term thinking is never right for a pension fund with a well-diversified portfolio. In fact, stocks beat bonds by 5 percent in the 20th century.

Fact:
This year, we reduced our public stock allocation not because we have lost confidence in stocks, but in part to make more assets available for private equity. We believe private equity will outperform stock earnings by at least 3 percentage points. Private equity is the strongest long-term performance of an asset class in our portfolio.

Fact:
Our 77-year investment records show that CalPERS portfolio gains significantly increased when the Board removed restrictions on global stock investing in the mid-1960s. Since then, annual portfolio growth increased sharply with the notable exceptions of the two recessions of the current decade.

Posted by I'll take it
a resident of Menlo Park: Belle Haven
on May 5, 2010 at 11:31 pm

Fact vs Myth throws in a lot of factoids that are irrelevant to the discussion at hand. The numbers simply don't apply to Menlo Park. We'd be thrilled if our city employees were only expecting an average retirement of $25k/year!

Once again, those public "servants" who are currently slopping at the trough are not going to lose a single dime because of this two-tier system. But here's another fact you won't like -- but one that is directly and profoundly related to the reality that Menlo Park must address: if your greed drives us into bankruptcy, you will get nothing.

We're not blaming you for Wall Street's missteps. Don't blame us. We didn't get those millions either. And now you're trying to extract the few remaining dollars we do have to finance your retirement. We can't afford to retire and will probably drop dead on the job. Yep, that will be one less worker paying into your retirement account, so sad for you.

Posted by a concerned taxpayer
a resident of Menlo Park: Menlo Oaks
on May 6, 2010 at 3:15 am

For once I agree with John Boyle and that is unusual. Seems like the problem is solved to me and there is no need for the iniative any longer. Why waste money and effort for such a measure? If you don't like the people in office, vote them out. I think this is just a ploy by the pro development to have some control over the present city council.

Posted by Fact Vs. Myth
a resident of another community
on May 6, 2010 at 4:28 pm

Dear Peter Carpenter,
It seem you neglected to mention it is Firefighters,Police & Milk Inspectors not city employees, boy yo guys misguide the public by making it seem like it's average city employees who are doing this to you. Why not go after Fire and Police...Sacred Cows Right

Posted by Blue Collar Public Worker
a resident of another community
on May 6, 2010 at 8:08 pm

1% of all Cal Pers retries receive over $100,000 a year. The way this works is you go for the low hanging apples on the tree first then move up. Old tactic but not entirely without merit. What is missing here is transparency by the Pension Reformers, with all due respect I'll be surprised if it goes to a vote, but that remains to be seen.

Posted by Exhausted
a resident of Menlo Park: Felton Gables
on May 6, 2010 at 8:44 pm

As a tax payer, I'm exhausted. I'm tired of hearing all the "greed comments" the "woe is me comments" the "you've got yours, now let us have ours comments" the "you made millions from the stock market, let us have our pension comments" the "you're a right winger comments" etc. This blog doesn't matter, BCPW's comments don't matter, neither do any of the union wonks matter, what matters is bottomline: if we don't have the money, you should not get any money, period. That's what happens when the private sector goes bankrupt, that's what happens when one overextends themselves. The overspending, whether union people think it's justified, just doesn't matter anymore. You can't get blood from a stone, and we are quickly driving toward that reality. Whether you are a Democrat or Republican my only suggestion would be to vote people into office that know how to use a calculator, and can make tough, fiscally responsible decisions, the rest is just noise.

Posted by Fact Vs. Myth
a resident of another community
on May 7, 2010 at 7:10 am

I'll tell you the bottom line Exhausted,

It was the lying dotcommers that caused the first recession back in the 90's greed and it was cheat'n wall st. and the banking systemm this time.

More regulations on the system and less ups and downs. An economist said that we create these bubbles so the rich stay rich and when they start losing money they scrape and they claw to recover. Then comes where they get the money from and guess what, were it.

So your mentality is if I don't have it then you can't. So if you have a Mercedes and I want it I just come over and take it then. Yeah right. Isn't that stealing?

Posted by POGO
a resident of Woodside: other
on May 7, 2010 at 9:20 am

Myth -

In an earlier post, you complain that public employees don't get to enjoy all of those wonderful things from the private sector like big bonuses and stock options (and by the way, I'm still waiting for both).

Now you say the private sector obtains all of those things by "lying," "greed," and "cheat'n."

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 7, 2010 at 9:35 am

From Real Clear Markets:
Pension reform is now on the table in a number of states. Illinois, which by some measures is suffering from the largest unfunded pension liabilities of any state, passed legislation earlier this year which rolls back the retirement age for state workers from 62 to 67, though it only applies to those entering the system as new hires.

The new law also bases pensions on the last eight years of earnings, rather than the current four years, and prohibits public employees from drawing pensions from more than one source. The measure followed an investigative series in the Chicago Sun-Times last year which found the pension bill for state, Cook County and the city of Chicago pensions were upwards of $800 million a month.

Pension costs are a central part of campaigns in states with the worst fiscal outlooks. Meg Whitman has made reform of California's system a key part of her campaign to be governor in a state where a recent study estimated the three major public employee pension funds to be a half trillion dollars underfunded. Whitman is touting a plan to move employees to a defined contribution plan. Her likely Democratic opponent, Jerry Brown, has slammed the plan an effort "to put everyone into the loving embrace of Wall Street." That clearly sets out the turf between the two.

Staggering pension costs have even sparked calls for reform from public union allies. Los Angeles Mayor Antonio Villaraigosa used his job as a union organizer for teachers as a jumping off point for his political career, but with his city under budget pressures so severe he's worried about running out of cash, he's calling for scaling back public pensions. No wonder. Pension contributions will consume nearly a fifth of L.A.'s general fund this year.

Although pension costs are a long-term problem, public sector pay increases, including automatic gains locked in by contracts, have helped drive budget deficits and are now a target for cuts to help balance budgets. When Christie announced an $833 million cut in state aid to local school districts, he pointed out that if teachers took a one-year pay freeze and agreed to contribute a small amount to their health plans, districts could make up the entire lost state subsidy. But only a handful of the state's 591 school districts won such concessions from their teachers, which sparked anger in Jersey, where private sector pay declined 1.8 percent last year. That prompted a school budget revolt where voters in 60 percent of towns rejected school budgets.

In Chicago, meanwhile, school officials are trying to leverage the fact that private wages declined 1.2 percent last year to get teachers to accept a one-year wage freeze, which the system estimates would save $169 million. In New York, Gov. Paterson used emergency powers of his office to delay a 4 percent wage hike for state workers under the rationale that the state was in danger of running out of money (in fact, the state has delayed sending out tax refunds for the same reason). Paterson is lobbying to make the freeze permanent, but the legislature is balking. In Louisiana Gov. Bobby Jindal has already signed off on pay freezes for 90,000 executive and rank and file workers to deal with a $1 billion budget shortfall in a $25 billion budget.

Posted by Fact Vs. Myth
a resident of another community
on May 7, 2010 at 11:39 am

Peter,

My wife is a teacher and she gets a whopping $250 a month towards her health care which costs around $700 a month and she hasn't received a raise for three years. I pay cobra for my 23 year old daughter at a cost of $588 a month. I have out of pocket payments towards Health insurance also at around $400 a month. So what's your point? You people think were living the life of Riley. Let me tell you the way it works when you retire. There is a 4 tier system where if you take the highest allowable benefit then when you die your wife gets the lowest amount so most take the mid range benefit which is considerably less so your wife if you should pass won't see a change in the amount she's been used to seeing. I'll average about 40,000.00
if I'm lucky. So tel me I'm ripping off the system. I pay my taxes as well. Why don't ya all apply for city jobs and see how great it is.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 7, 2010 at 12:34 pm

Peter -
We made a bet last week (lunch at Borrone's) when the staff proposed that the Council impose a 2-tier retirement system. I bet the Council would follow staff recommendations, you bet they wouldn't.
Now that the Council this week has gone ahead and passed their recommendations - unanimously no less - it looks like lunchtime to me. And I'm feeling really hungry.
When's a good day for you? I'm available any day next week.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 7, 2010 at 12:51 pm

Fact vs Myth -
Thanks for posting the facts on CALPERS. I learned a lot that I hadn't known.
Perhaps you can dig up the facts about something that I've heard but haven't been able to confirm. During the go-go 90's and before the market crash in '08, I'd heard that CALPERS returns were so good that payments into the fund by municipalities were reduced and in some years, eliminated. If this is true, then those belly-aching about having to put more in the kitty now that the market is down might want to reconsider their positions, lest they be accused of being fair-weather citizens.

Posted by Fact vs Myth
a resident of another community
on May 7, 2010 at 2:28 pm

Steve, during the boom years when CalPERS did not require a city contribution, and thus became superfunded. Probably the city decided not to participate. If the municipalities would have contributed what they were supposed to when all of the markets were performing well, they would not be in this situation. Let's face it, most government agencies are not frugal.

I know for years where I worked they did not put a penny in only the employees portion was deducted, back then I thought how strange. We are contributing but they were not. For us I think it was like a ten year period. Thanks for reminding me Steve

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 7, 2010 at 2:41 pm

Whether or not cities made the contributions that they should have is a valid issue.

BUT that does not change the fact that, whether or not the retirements were properly funded, the current retirement plans are still not justified by the marketplace or by the above market salaries which public workers are now receiving.

Posted by Fact vs Myth
a resident of another community
on May 7, 2010 at 3:14 pm

Where do the past Mayors and city council members stand on these possible causes for the mess they left

If the City had established long-term budget forecasts that reflected pension costs under favorable as well as unfavorable times (sensitivity analysis). The City could have ensured that they had sufficient revenue sources to enable them to continue to pay for their pensions even if their financial situation deteriorated.

They continued to pay the employee contribution to the pension plan even though pension law would have allowed them to no pay these contributions. The City retained the discipline of making pension contributions even though they could have foregone them.

The City took a long-term view (forecasts) of the costs of potential pension increases, rather than taking a short-term look. They may have been able to see the long-term cost impact of pension increases on their budgets.

They viewed reduced pension costs of the type that occurred during boom years as being temporary not permanent. They viewed the benefit of the reduced pension costs as found money that could and should be spent only on one-time projects or be committed to building of reserves rather than being used to increase entitlements.

Posted by Blue Collar Public Worker
a resident of another community
on May 7, 2010 at 5:56 pm

Fact is correct Steve and even though Peter will argue my next point I think Calstrs and Calpers are right. A couple of items stick out to me.
1. Both have been around for 80 years even during the depression and survived
2. The Stanford Grad student study that all the reformers use as their base is using a zero risk model for investment returns, Pers/Strs has risk but they have so much power they can make demands on investments which help get the returns they get. In other words they pay attention and there's not allot of room for failure. Not that they haven't had any, they have but they can bounce back quickly 46 billion with a B in 5 months just recently.
3. The Stanford study uses a 4.5% rate of return both systems have been returning 7.75 for the last 20 years, just recently 11.75%. 20 years ago they were only 50% funded for retirement benefit funding today they are 80%. 20 years ago it cost agencies more than it does today to fund the program.
Here is the info decide for yourself.
BCPWWeb Link

Posted by POGO
a resident of Woodside: other
on May 7, 2010 at 6:08 pm

Again, BCPW, if you truly have that level of confidence in Calpers projected 7.75% rate of return (exercising all of that "power" you referenced), you should certainly be willing to limit the taxpayers liability beyond Calpers actual performance.

I think all elected officials and taxpayers would love that. Is it a deal?

Posted by Fact vs Myth
a resident of another community
on May 7, 2010 at 6:43 pm

Wrong POGO it was your previous city government people who let you down when they had the chance to put money away for a rainy day they used it for other things. Most cities were superfunded for at least 12-18 years and did not pay there portion towards pension costs. While the employee was still making his commitment towards his retirement the cities were taking a holiday with the employees retirement. I think some of those people were on that ballot initiative drive. Maybe you should ask them what they were doing with that extra money when they could have been making sure it never came to this? Hmmm

Posted by POGO
a resident of Woodside: other
on May 7, 2010 at 7:00 pm

Myth -

Well, I'm not the least bit surprised that you didn't answer the question. Your points had nothing to do with the underfunding that may have taken place in the past. You have attributed the problem to Wall Street greed and theft that ruined Calpers performance.

Since YOU and BCPW are representing that there really isn't a problem with unfunded pension liabilities (remember that Stanford study that you dismiss?) and that "powerful" Calpers will get a healthy return (that all that negative talk is a "myth"...), then YOU should be willing to live by Calpers ACTUAL performance.

Why do you need the taxpayers to serve as your backstop if this problem is, as you say, overstated? If you truly believe that, why won't you live with Calpers performance? Still waiting for that answer.

Posted by Fact vs Myth
a resident of another community
on May 7, 2010 at 7:24 pm

Seems to me POGO you wanna cover up for past discretion's of your city officials. Like they always thought times were gonna be rosy, so they spent the money that they should have put away for that rainy day. We were forced to, but they opted out. Hmmm

Posted by Fact vs Myth
a resident of another community
on May 8, 2010 at 7:24 am

A Little Woody Guthri For Ya POGO

I'm just a lonesome traveler, The Great Historical Bum.
Highly educated from history I have come.
I built the Rock of Ages, 'twas in the Year of One
And that was about the biggest thing that man had ever done.

I worked in the Garden of Eden, that was the year of two,
Joined the apple pickers union, I always paid my due;
I'm the man that signed the contract to raise the rising sun,
And that was about the biggest thing that man had ever done.

I was straw boss on the Pyramids, the Tower of Babel, too;
I opened up the ocean let the migrant children through,
I fought a million battles and I never lost a one,
And that was about the biggest thing that man had ever done.

I beat the daring Roman, I beat the daring Turk,
Defeated Nero's army with thirty minutes work,
I fought the greatest leaders and I licked them everyone
And that was about the biggest thing that man had ever done.

I stopped old Caesar's Romans, and I stopped the Kubla Khan;
I took but half an hour's work to beat the Pharaoh's bands;
I knocked old Kaiser Bill flat, then I dumped the bloody Huns,
And that's about the biggest thing that man has ever done.

I was in the Revolution when we set the country free;
Me and a couple of Indians that dumped the Boston tea;
We won the battle at Valley Forge, the battle of Bully Run;
And that was about the biggest thing that man has ever done.

Next, we won the slavery war, some other folks and me,
And every slave from sea to sea was all turned loose by me.
I divorced old Madam slavery, and I wed this freedom dame.
And that's about the biggest thing that man has ever done.

And then I took to farming on the great midwestern plain,
The dust it blowed a hundred years, but never come a rain'
Well, me and a million other fellas left there on the run
And that was about the biggest thing that man has ever done.

I clumb the rocky canyon where the Columbia River rolls,
Seen the salmon leaping the rapids and the falls
The big Grand Coulee Dam in the state of Washington
Is just about the biggest thing that man has ever done.

There's a building in New York that you call the Empire State
I rode the rods to 'Frisco to walk the Golden Gate
I've seen every foot of film that Hollywood has run
But Coulee is the biggest thing that man has ever done.

Three times the size of Boulder or the highest pyramid
Makes the Tower of Babel a plaything for a kid
From the rising of the river to the setting of the sun
The Coulee is the biggest thing that man has ever done.

There was a man across the ocean, I guess you knew him well,
His name was Adolf Hitler, goddam his soul to hell;
We kicked him in the panzers and put him on the run,
And that was about the biggest thing that man has ever done.

I'm living with my freedom wife in this big land we built;
It takes all forty eight States for me to spread my quilt.
Our kids are several millions now; they run from sun to sun.
And that's about the biggest thing that man has ever done.

I built mines and mills and factories to run for Uncle Sam;
I turned th' ploughs and wheels to feed my soldiers in your lands;
This Nazi job's a tough 'un, it'll take us everyone,
'Cause this is about the biggest thing that man has ever done.

There's warehouse guys and teamsters and guys that skin the cats
Guys that run my steel mill, my furnace and my blast
We'll stop the Axis rattlesnakes and thieves of old Nippon
And that will be the biggest thing that man has ever done.

I'd better quit my talking, 'cause I told you all I know,
But please remember, pardner, wherever you may go,
The people are building a peaceful world, and when the job is done
That'll be the biggest thing that man has ever done.

I better quit my talking now; I told you all I know,
But please remember, pardner, wherever you may go,
I'm older than your old folks, and I'm younger than the young,
And I'm about the biggest thing that man has ever done.

Posted by POGO
a resident of Woodside: other
on May 8, 2010 at 7:46 am

Do you really think someone using the pseudonym "POGO" wouldn't know Woody Guthrie?

You said everything at Calpers is okay and that the pension crisis is overblown. If true, you should be willing to live with Calpers future performance - for better or worse - and not use taxpayers as a backstop.

Posted by Fact vs Myth
a resident of another community
on May 8, 2010 at 8:35 am

POGO if you know Woodie then you know my union answer, I'm not the slave to which you want me to be. If your politicians let you and me down then you know who to go after those people who spent that money when they should have been putting it away. Thus we wouldn't be having this conversation about me sacrificing mine so you can go on living the life you enjoy in Woodside. See I don't live in a castle like yourself, I've had to scrape for what I've earned.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 8, 2010 at 9:32 am

Pogo -
That's a red herring and you know it. Whether Myth would agree to accept a retirement based on CALPERS performance is irrelevant.
The law states that CALPERS must be funded to meet future retirement claims. For 20 years or so CALPERS rode a bull market and municipalities & the state were largely able to avoid paying into the fund. Now, after the crash of 2008, they once again are required to contribute to meet the current projections. I fully expect the bull will return - the past week's excitement notwithstanding - and CALPERS returns will once again reduce retirement contributions from state & cities.
I'll remind those with short memories that CALPERS had a sterling reputation, prior to the recent Wall-Street-created crash, for being one of the most progressive and successful public pension funds in the world. They and the state and the city (and especially us the taxpayers) are going to have to fix the problems brought on by Wall Street bankers and a lax regulatory environment.
Those are the real causes of our current financial distress that need fixing - blaming unions and public employees is just a convenient scapegoating.
As Amy Traub points out in the Huff Post it's "part of a mounting conservative effort to direct populist rage against public sector workers and build political will to slash public services, prevent tax increases on the wealthy, and deflect attention from the real causes of our economic decline. After all, why regulate risk-taking bankers when you can stick it to the guy who picks up the trash?"
A bit rhetorical perhaps. Then again, after listening to some of the comments on this thread, perhaps not.

Posted by Blue Collar Public Worker
a resident of another community
on May 8, 2010 at 10:10 am

POGO
Your request for me to put my money where my mouth is is fair enough and so I have and I am living with it's future performance. I took all my other pensions and rolled them into PERS and bought the max amount of service years. I know your going to say of course it's guaranteed by the tax payers, etc. But hear me out, if I don't retire in the system for whatever reason I don't get it back, I could die, get divorced, become disabled or even go to jail, I won't get my money back. So with all respect I have put my money where my mouth is.
BCPW

Posted by Menlo Voter
a resident of Menlo Park: other
on May 8, 2010 at 4:21 pm

Blue Collar:

maybe Calpers works differently than when I left and pulled ALL of my contributions. Because they were mine. I had to pay a tax penalty on it to boot becasue it was contributed as pre tax income. If you contributed it, it belongs to you and you can take it back. Unless somehting has changed, and it might have. Has it?

Posted by POGO
a resident of Woodside: other
on May 8, 2010 at 5:31 pm

BCPW, Myth and Steve -

Myth: I never did get an answer from you. You keep saying that this is all overblown and the Calpers has near-magical investment powers. So stand behind your reps, Myth. Live with Calpers performance and lose the taxpayer backstop. Or are those reps a myth, Myth? Yes or no, Myth?

BCPW, you haven't put your money where you mouth is any more than I have by contributing to Social Security. But here's a news flash for you. Notwithstanding the post from Menlo Voter who says that you actually CAN get your money out of Calpers, guess what, if we in the private sector die before age 65, we lose all of our Social Security and pension contributions, too! Welcome to the real life, BC.

Myth: Castles are nice but can be extremely expensive to heat, so count your blessings.

Finally, Steve, this has nothing to do with past performance, the wonderful Calpers performance of the 1980's and 1990's and Wall Street greed in the past few years. Both BCPW and Myth (and now you) have consistently maintained that this pension liability thing is overblown. You are the ones who have asserted that Calpers has such great power that they can literally dictate returns from their investments.

Well, if that's really true, then you have nothing to worry about, do you? QUESTION: WHY DO YOU NEED A TAXPAYER BACKSTOP IF EVERYTHING YOU GUYS SAY ABOUT CALPERS IS TRUE? (Hint: Perhaps it's not true...) I'm willing to stand behind my investment decisions and no one bails me out. Still waiting for that answer from all of you.

Perhaps the three of you missed those pesky links that above that showed Calpers' disasterous real estate and private equity investments during the past decade. It was in all the papers. Maybe those ventures didn't get the message about how powerful Calpers is supposed to be.

Finally, you may want to read The Almanac story about Atherton. It appeared YESTERDAY. Web Link Maybe it's just another coincidence or, perhaps... a myth.

Posted by Menlo Voter
a resident of Menlo Park: other
on May 8, 2010 at 7:16 pm

Blue Collar:

you know what? if you had put that money in a 401k I'd say you were putting your money where your mouth is. The fact is, if Calpers screws up and doesn't produce the 7.5% return they forcast, NO ONE EXCEPT THE TAXPAYER LOSES!!! You don't and Calpers doesn't because they just go to the municipalities (READ THAT TAX PAYER) to fund what doesn't match their expected returns. If you put your money in a 401k and it didn't perform you wouldn't be able to stick your hand in MY pocket to make up the difference. So if you want to claim you are putting your money where your mouth is, when Calpers comes up short, you take a reduction in your retirement payout. Bet you won't.

Posted by Blue Collar Public Worker
a resident of another community
on May 8, 2010 at 7:37 pm

MV, POGO,
First I do pay Social Security also and at the end of the day the agencies and the tax payers have not had to bail out PERS or STERS. Are there times when they have to pay more to the fund yes, are there times when they pay none, less, yes. So given the FACT they pay less even now than they did 20 years ago as a percentage please tell me where is this big bailout? This is a fund to get the benefit the payment goes up and down just like an adjustable rate mortgage. The point is, your out of gas, the plan has worked for 80 years. Have the taxpayers been the safety valve yes, but they have received more benefit than they have payed out to date. So please tell me what tax payer has lost, show me?
BCPW

Posted by It's Over
a resident of Menlo Park: Felton Gables
on May 8, 2010 at 10:03 pm

It's over BCPW, your support for these extremely high pension and benefits has come to an end. Your posts make no sense, your union is bankrupting this state. Unions do NOT help this society, period. Gone are the textile mills, gone are the steel mills, almost gone is the auto industry, and soon to be gone will be this outlandish, over hyped and over paid for pensions and benefits programs for city, state and federal workers. This cannot be sustained, no matter what math you are using, the citizen is tired of paying out more and more and more, to the point where we have bankrupted the state, the country and many municipalities. I don't really understand what the issue is, other than many citizens have not been listening over the years. In a very normal situation for private industry, you would have already lost your job, or had a pay reduction. I, for the life of me, do not understand how it has gone this far, and/or why we are defending our reasons for trying to protect the taxpayer, this is surreal!

Posted by Steve
a resident of Menlo Park: Allied Arts/Stanford Park
on May 8, 2010 at 11:37 pm

This is a good first step. I propose a second step... fire the management. Re-hire with a fair wage and in effect start over with a clean slate. Will they sue? Sure. But I bet it will be cheaper in the long run. Just a thought.

Posted by Blue Collar Public Worker
a resident of another community
on May 9, 2010 at 8:51 am

It's over, Steve and others,
While I am not a union member I am sure they are a necessary evil, comments like these are why.
Posted by Joseph E. Davis, a resident of the Woodside: Emerald Lake Hills neighborhood, on May 7, 2010 at 9:08 pm
The letter writer has an excellent point. This measure does not go nearly far enough. The appropriate measures are:
1. Cut the salaries and benefits of all government workers to a market level. I believe a 50% cut is appropriate. Fire any worker who refuses and hire a replacement from California's teeming masses of unemployed.
2. Make public sector unions illegal.

Steve even your statement is draconian.

These statements/ideas like fire everyone and hire new people, cut salaries by 50%, come on, that's a little too much isn't it? So here we are just like I said when I started here a month ago. The rich are now getting bolder, now you guys got a toe hold and we have gone from "oh the initiative is just for future worker" to cut all their salaries in half, fire them all. I asked before and I'll ask again does this sound fair?

Posted by Menlo Voter
a resident of Menlo Park: other
on May 9, 2010 at 9:06 am

Blue Collar:

you just don't get it so I'll try and make it simpler for you. Just because Pers hasn't had to go to the tax payer in the past to make up shortfalls doesn't mean they won't need to in the future. You know those adds on TV and radio for various investment vehicles? "past performance is no guarantee of future performance." So if you really think Pers isn't going to come up short, put your money where your mouth is and when it happens, take a cut to your retirement benefit. I still say you won't. You want your cake and eat it too.

Posted by Blue Collar Public Worker
a resident of another community
on May 9, 2010 at 9:48 am

MV
When the time comes that the taxpayer would become upside down I would consider a deal like that, that would be fair. Meaning all the monies they have not had to pay into the fund in the past vs. the monies their paying now. With the safety valve that if the fund comes back we get paid back? But that day is not going to come the fund is stable. And why didn't the initiative have that kind of focus because that's not the focus. Do you think it's fair to cut a salary by 50%, fire everyone, cut all benefits in half? Can you see how it would appear that this initiative is just the start? All these people saying oh look at the Auto and Airline industry the unions ran them out of business. There are two sides to that story the other side is they enjoyed billions in profits for their shareholders and management and unions. But the UAW cut and so did the Airlines worker and it still wasn't enough now it's our fault? How about NEWMI the only union Toyota plant left in the nation. You think they didn't plan that shut down? It's not just because of the unions it's the area, even fuel is 20% more expensive here. Of course they can go someplace like Tennessee and do it cheaper and make more profits and the management will get a raise for such a good job! What about all those people who lost jobs for profit?
BCPW

Posted by Menlo Voter
a resident of Menlo Park: other
on May 9, 2010 at 10:57 am

Blue Collar asks: "What about all those people who lost jobs for profit?"

What about them? I feel bad for them, but that is the way a free economy works. Civil servants live in a rarified world where real world economics don't seem to apply to them.

No, I don't advocate firing everyone and rehiring at 50% of current salaries, but I do beleive the salaries need to be brought in line to current conditions. I also think benefits need to be the same as what is available in the private sector. I've taken a 20% cut in pay, have had to change health plans because of increased contribution requirements and I'm not getting the added vacation I am due. Oh, and the only retirement I have is what I contribute to a 401k. I will have social security if its around when I finally retire. I think it's fair to expect civil servants to have the same deal.

Nowhere else in this country outside civil service do employees get defined benefit retirement. So if you want to talk about what is fair, I think civil servants recieving pay and benefits comparable to what is available in the private sector is fair. That is not what we currently have.

Posted by POGO
a resident of Woodside: other
on May 9, 2010 at 10:57 am

BCPW -

First, Steve has been one of the very few people "on your side" and I'm pretty sure he was being facetious.

Second, you are still apparently unwilling to put your money where your mouth is. You say, "when the time comes that the taxpayer would become upside down I would consider a deal like that." Gee, thanks sport. I'll tell you what, I won't "consider" any bailouts either until one my investments goes upside down, too. You still are unwilling to stand by YOUR representations that everything is okay over at Calpers. That's because IT ISN'T and it seems like everyone knows it but you and the appropriately named Myth.

This all started a few years ago when economic times were very good. Employees and public officials colluded to increase employee pension benefits a remarkable 35% (!) immediately and even made that change retroactive notwithstanding the stubborn fact that employees and cities had not paid in sufficient funds to support that increase. Both parties were completely irresponsible and I hold elected officials MORE at fault because they are supposed to be the adults. Then, of course, the very worst possible thing happened, the economy turned south (it wasn't sustainable either!) and now our pension liability is our financial albatross.

So all of those references you, Myth and Steve make as to how sustainable it has been for the last 80 years, ignore the fact that benefits were increased by a whopping 35% just a few years ago... at almost precisely the moment tax revenues began to decline. All we want to do is roll back to the prior pension calculation which also seemed to work fine for many years. This change won't impact current employees a bit, just newly hired employees.

So, BC, It's Over has it precisely right - It's Over. You, Myth and some other public workers may not know it, but everyone else does.

Posted by Menlo Voter
a resident of Menlo Park: other
on May 9, 2010 at 12:29 pm

Blue Collar:

the savings form this initiative won't suffice. It needs to be state wide for it to truly do any good. It will, however help with our underfunded portion of future employees future pensions. It's a start.

Posted by POGO
a resident of Woodside: other
on May 9, 2010 at 3:25 pm

I'm going to assume because Steve, BCPW and Myth have all refused to answer my question - "why do you need the taxpayer backstop if you truly believe what you've been saying that this crisis is overblown and all is well at Calpers?" - THAT YOU HAVE NO ANSWER.

You want the taxpayer backstop because you don't believe your own redirect. And after watching the stock market dive last week (Calpers took a bath, by the way) and the rioting public workers in Greece, I can understand your reluctance to put your future in Calpers hands.

But unlike you, I won't duck and will give you the courtesy of a direct answer to your question. BCPW, you asked "how much do you think the initiative can/will save?" I'm not pension actuary but thanks to Mr. Thiele-Sardina (and a reference to a Menlo Park official staff report), here are your numbers:

The "2.7%/55 to 2%/60 decreases Menlo Park's portion of the pension payment significantly for new hires. The employer rate (from Menlo Park Staff report 09-129) goes from 16.196% to 9.139%. While this 7% differential is small, it will add up over an extended time."

A reduction from 16.196% (is that enough decimal places and accurate enough for you???) to 9.139% represents a 43.6% reduction. That's not exactly a "rounding error," is it? Because this new limitation only applies to new hires, we have to wait a bit for the full impact of this change but better late than never.

Is that answer direct enough for you?

Finally, BC, you said "see you in court!" That's a very revealing comment because I'm not sure what element of contract law you could challenge. And you know, I don't recall the taxpayers going to court when workers were given that 35% retroactive pension increase back in 2007. So in the event you and your colleagues think it's worth litigating this proposed change, I hope our elected officials or a taxpayer group will go after that retroactive feature in a counterclaim.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 9, 2010 at 3:54 pm

BCPW and Friends - when the City decides to actually fund its unfunded pension liability and realizes how big an annual budget deficit that will create you will then be begging for the very moderate reforms in the citizen initiative. Because when it fully funds its unfunded pension liabilities the City will have to both reduce its workforce and dramatically revise its benefits programs. Wise union leaders would be working with the City now to minimize the scope of such drastic future steps.

Posted by Blue Collar Public Worker
a resident of another community
on May 9, 2010 at 5:54 pm

Hey POGO
You want it all don't you? What about when the market comes back then you will pay nothing right? This is so clear it's a joke if not for the fun of poking you to make you react I would never write another word. I don't care what any Stanford Study says or Roy or Henry or you for that matter,I believe PERS/STERS will recover. So my idea of above of sharing the risk is not good enough POGO? [Portion removed; personal attacks violate terms of use.] And by the way I think you will see someone in court for sure the union guys. You know and I know those union dues will dry up quick if they don't get defended. This will be interesting if it goes any further, you know a funny thing comes to mind. One of the biggest things unionism ever did was create child labor laws, remember that from your history books? [Portion removed]
BCPW

Posted by WTF
a resident of Menlo Park: Menlo Oaks
on May 9, 2010 at 11:00 pm

Gentlemen

So how does a pig have anything to do with the subject at hand?

CalPERS has already all but admitted that they cannot return the kind of money they used to. That is evident by the fact that they raised the rate they charge cities for the same pension. This can ONLY get worse.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 11, 2010 at 5:07 pm

POGO -
I've been away for awhile, which is why I haven't responded to your query:
"WHY DO YOU NEED A TAXPAYER BACKSTOP IF EVERYTHING YOU GUYS SAY ABOUT CALPERS IS TRUE? You are the ones who have asserted that Calpers has such great power that they can literally dictate returns from their investments."
First, no one has asserted that CALPERS can dictate returns on their investments - if that were true they would never have a loss. In fact in the past 26 years, they had losses in 5 of those years. What has been stated is that, overall, this is still a pretty good track record.
To be sure, along with most everyone else, CALPERS stumbled badly in 2008 when the market crashed and they lost $55Billion (with a B!). That's a lotta loot, no question, but still less than 5% of the $1.24 Trillion that they manage. Even with this loss, CalPERS' 20-year investment return is a respectable 7.75 percent  the long-term target needed to fund retirement benefits for 1.6 million CalPERS members. So if I express confidence in CALPERS performance, I think their track record justifies it.
You ask "why the taxpayer needs to be the backstop" if CALPERS has such stellar performance? Perhaps you've forgotten that employers, both private and public are responsible for partially funding their employees' retirement accounts. That's how it works for me and I assume how it worked for you as well. I pay part, my employer pays part. Nothing wrong with that is there?
However, state and municipal governments have had a free ride for so long - due entirely to the successful investments of CALPERS - that they've gotten used to not contributing to these retirement accounts at all. Instead, they used this money to fund other government activities while CALPERS earnings covered their employee retirement liabilities. When CALPERS has 2 years of successive losses - as has happened only two time in 26 years, most recently in 2008/2009 - then governments (taxpayers) have to step back in to begin to offset the projected liabilities.
This doesn't mean that taxpayers will end up paying the full liability, or even that they will pay for more than a couple years. If the economy turns around, as it appears to be doing, CALPERS earnings will return and the taxpayers will once again be off the hook for paying into employee retirement accounts.
To put it another way, when it comes to funding employee retirements, taxpayers will once again be getting a free ride, as they have for most of the past 30 years.
Have a little faith for heaven's sake POGO - this is still America, land of dreams and opportunities. The recession is winding down, the economy is turning around.

Posted by Interested
a resident of another community
on May 11, 2010 at 9:38 pm

However, state and municipal governments have had a free ride for so long - due entirely to the successful investments of CALPERS - that they've gotten used to not contributing to these retirement accounts at all. Instead, they used this money to fund other government activities while CALPERS earnings covered their employee retirement liabilities. When CALPERS has 2 years of successive losses - as has happened only two time in 26 years, most recently in 2008/2009 - then governments (taxpayers) have to step back in to begin to offset the projected liabilities.

This doesn't mean that taxpayers will end up paying the full liability, or even that they will pay for more than a couple years. If the economy turns around, as it appears to be doing, CALPERS earnings will return and the taxpayers will once again be off the hook for paying into employee retirement accounts.

To put it another way, when it comes to funding employee retirements, taxpayers will once again be getting a free ride, as they have for most of the past 30 years.

STEVE

Now you have gone and ruined this silly rant. Why is it that someone like you always feels the need to insert the truth and ruin the fun... Oh well, on to the next non issue....................

Posted by Blue Collar Public Worker
a resident of another community
on May 11, 2010 at 10:07 pm

An interesting fact the City of Menlo Park only has one retired employee making $100,000 in retirement, there are about 10 firefighters.Sounds like the PERS rhetoric is about right 1% of the Pers system makes 100.000 a year.
BCPW

Posted by Light Not Heat
a resident of Menlo Park: Central Menlo Park
on May 11, 2010 at 10:49 pm

Steve,
Last fiscal year CalPERS had a loss of 24.8% (see June 30, 2009 investment report available at Web Link). I believe the loss was approximately $55 billion, but on a base of approximately $250 billion in assets. Current CalPERS assets are $206.5 billion (Web Link)

I don't have time tonight to look up Menlo Park retirement and benefit contributions, but do you have a source which shows that they haven't made contributions for most of the past 30 years?

Posted by POGO
a resident of Woodside: other
on May 12, 2010 at 9:42 am

First, thank you for your refreshingly thoughtful reply. Unlike others, I'm glad to give you DIRECT answers to each of your questions but I apologize in advance for the lengthy reply. I'll divide this up into two posts.

You said, "…no one has asserted that CALPERS can dictate returns on their investments…" Actually, BCPW said it - TWICE. First, BCPW said "…they (CALPERS) have so much power they can make demands on investments which help get the returns they get." BCPW also said, "the one thing PERS/STERS have and always had is power. That power has enabled them in many cases to closely manage and sometimes even DICTATE [emphasis added] to the investments managers what they expect on return…"

Unlike others, I don't make this stuff up because I don't have to. If there's one thing we've learned recently, it's that even the big guys (Bear Stearns, Merrill Lynch, Lehman, Freddie, Fannie, etc.) get it wrong. And CALPERS has gotten it wrong, too. Compounding the problem is that they have reshaped their assets into even riskier investment vehicles to try to make up for those loses, which have only made matters even worse.

You said "CalPERS' 20-year investment return is a respectable 7.75 percent  the long-term target needed to fund retirement benefits for 1.6 million CalPERS members." Completely true. But their return is NEGATIVE for the past two years and given their new asset deployment in real estate and equities, their outlook for 2009/10 isn't rosy. Their historical 7.75% performance includes those frothy days from 2003 to 2007 when CALPERS made a killing. Those days are over, Steve. Today, a 7.75% target is extraordinarily ambitious for a $1+ trillion fund. And CALPERS will require a return of 14% to 15% for several years just to get their portfolio BACK to that 7.75% target. It's not even remotely realistic. Are any investment professionals that you know predicting 7.75% returns this year?

This from CALPERS Annual Report (at page 22) for 2009: The net rate of return on investments was negative 24.0 percent on a fair value basis, approximately 31.8 percentage points less than the actuarially assumed 7.75 percent investment return. As of June 30, 2007, the asset smoothing method set aside about 14 percent of the CalPERS fund as a "rainy day" fund. The negative 5.1 percent return for fiscal year 2007-08 used up about 13 percent of the 14 percent "rainy day" fund, leaving about 1 percent. Web Link After CALPERS' dismal performance in 2008-09, I'm sure that 1% is long gone.

Posted by POGO
a resident of Woodside: other
on May 12, 2010 at 9:43 am

But the most important thing you said was this, Steve: "Perhaps you've forgotten that employers, both private and public are responsible for partially funding their employees' retirement accounts. That's how it works for me and I assume how it worked for you as well. I pay part, my employer pays part. Nothing wrong with that is there?" Yes, Steve, there is nothing wrong at all with that and you are also correct that some of my employers matched some of the contributions I made to my 401(k). But unlike with our public workers and CALPERS, NONE OF MY EMPLOYERS EVER GUARANTEED MY RETURNS.

And that, Steve, is the central point of this discussion. If my 401(k) loses a third of its value (which it did, by the way), my employers don't make up for my losses. But with public workers, that's exactly what happens. If CALPERS fails to meet that 7.75% target, guess who's gonna have to "make good" on those pension payments? You got it, Steve, TAXPAYERS. And cities, counties and states aren't exactly "rolling in dough" these days!

If these workers truly have the confidence in CALPERS performance that they (and you) claim, then they should be willing to "put their money where their mouth is" and remove the taxpayer backstop. They should be willing to live by CALPERS performance just as the rest of us have to live with our retirement portfolio performance. But they're not… and what does that tell you about their REAL confidence in CALPERS? They know this system is totally unsustainable, too; they just want to stick the taxpayer with this bill.

As for that faith in America, Steve, no one has more than me. But the problem is that the only things that seem to be growing in America today are government, taxes and debt. And this burden is going to fall harder and harder on the fewer and fewer people who still pay income taxes. Let me ask you this, Steve: Can you think of a country that tried to support a huge government bureaucracy where its public workers could retire at age 50 with 80% of their pay? Hint: It's on the front page of most of today's papers, including today's NY Times Web Link Is there a lesson here, Steve? Do you think this can't happen here?

People complained that no one in our government, the SEC or at the Federal Reserve warned us about the recent financial crisis that nearly brought down our financial system so recently. But these same people appear perfectly content to ignore the warning signs that are screaming at them about this impending crisis. Instead of calling them "mean-spirited," our public workers should thank people like Mr. Thiele-Sardina for making an effort to try to solve it.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 12, 2010 at 1:27 pm

POGO -
I like that you broke your response into digestible chunks. Let me try that too.
To respond to your last post first, your main point seems to be that those with defined benefit plans (pensions) should be willing to convert to defined contribution plans (401K).
First, recognize that you yourself are, or will be, benefiting from a defined benefit plan paid for by current taxpayers. It's called Social Security. The main difference between it and the CALPERS retirement is that CALPERS is a funded plan, with contributions from employees and employers going into a trust fund that makes the payments to retired employees while Social Security is an unfunded plan with payments to retirees coming directly from working taxpayers. While both plans need fixing, the problem with Social Security is much worse than that for CALPERS. The $200Billion CALPERS fund will cover most of the retirement needs of it's 1.6million members; it just needs shoring up after the down market of the past two years. SS needs some pretty fundamental changes including reducing benefits, raising retirement ages, and increasing the payroll tax.
Second, you imply that only government employees enjoy the security of pensions. Actually, from what I've been able to learn, a bit less than 20% of private workers are still under defined benefit plans, down appreciably from 64% who were just 30 years ago, but still a very large number of private employees who are looking forward to retiring with a pension. Both public and private employers are responsible for making sure their pension plans are funded. During good economic times, the investment funds earn enough to cover their liabilities; during bad economic times, like now, the employers need to make up the difference. If the employer is a government agency, they can choose to find these funds from elsewhere in the budget (some foresighted governments may have actually budgeted for this!) or they can raise taxes.
Finally, you state "the only things that seem to be growing in America today are government, taxes and debt". Actually, federal taxes were down slightly this past year for most folks, thanks to the ARRA. But along with these negatives you list there are also some positives to point out as well. Jobs are growing again (albeit slowly). Income and profits are also up for many companies and retail shops are seeing increases in sales. Tax receipts are also starting to come back because of the above.
Have faith - the economic cycle is turning and things are getting better.
More later.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 12, 2010 at 5:10 pm

POGO -
Page 2
You write: "Let me ask you this, Steve: Can you think of a country that tried to support a huge government bureaucracy where its public workers could retire at age 50 with 80% of their pay? Hint: It's on the front page of most of today's papers, including today's NY Times Web Link Is there a lesson here, Steve? Do you think this can't happen here?"
Yes, I think Greece can't happen here. For reasons much better explained here Web Link but that can be summarized with:
1. The U.S. has much stronger economic fundamentals than Greece.
2. Americans work harder than almost everyone.
3. At least for now, America doesn't have nearly as much debt as Greece and, countries with similar amounts of debt don't necessarily collapse.
4. The Fed can print money. (Although that isn't necessarily a good thing.)
5. The U.S. government has more legitimacy
So while I agree that, once we're out of this near-depression, the first order of business "should" be to get our debt and social spending under control, I think it is alarmist to be comparing our situation with that of Greece.
Getting debt and social spending under control by the way will likely require more taxes, less social security and medicare, and reduced government services all the way around. None of which will be politically palatable so that's why I say "should", not will.
BTW - the CALPERS formula for retirement is no where near as generous as the one you mention (for Greece presumably). From the CALPERS primer :
"the basic service retirement formula for State miscellaneous and school members is the 2 percent at 55 formula, which provides 2 percent of the member's highest annual compensation for each year of service at age 55. So, a teacher's aide retiring at age 55 with 25 years of service will receive 50 percent (2% x 25 = 50 ) of his or her highest annual compensation."
50% isn't much to retire on so I don't imagine many teachers choose to retire at this age, as I believe is support by references provided earlier. In fact I don't know many government employees who have retired early, unless there was a health issue. And I don't really know any who could be said to be "rich" based on their government retirements. On the other hand, I know 3 couples from private industry who retired young; two in theirs 40's, the other in their early 50's. All three are going very well financially though only the dual MBA couple could be considered rich.
My point is that, in my experience, those coming from private industry are more likely to retire young and well-off than than those coming from government service. Again, I believe the references provided above by Fact vs Myth support this.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 12, 2010 at 8:25 pm

Steve states:"2. Americans work harder than almost everyone."

Get out your passport and travel to places like Vietnam, China, India,and Singapore. Look at the productivity figures for other countries. Americans are among the least productive workers in the developed world.

Posted by Concerned Parent
a resident of Menlo Park: The Willows
on May 13, 2010 at 9:35 am

Just a comment on productivity.
We say that Americans work harder and are more productive than anyone else. As I look at our next generation, we have two major problems: 1) the kids don't work harder than others. They seem to have lost the hunger and drive. 2) There are fewer of them working to support more people retiring.
While there were arguments about how we couldn't become Greece, if we look at increasingly unfunded liabilities and a dwindling working population getting paid less to support the retirement of more of the population, it is not sustainable. This goes for both public employee pensions and Social Security.
The age of retirement needs to go up in Greece and for public employees here it does as well. It likely needs to go up for Social Security as well. One other comment about Social Security: it has been described here as a "fixed" benefit, yet in every notice I get that reports how much money I've paid with some projected benefits as of today with a caveat that they may be reduced significantly.
I wouldn't call that fixed and nor I do I think of it as secure. The solutions for both underfunded pensions and Social Secutiry can be similar though, both will need delayed retirement and likely a market based return rather than a fixed return.

Posted by POGO
a resident of Woodside: other
on May 13, 2010 at 11:03 am

Steve -

I'm not going to refute each of your points. We'll just have to agree to disagree.

If you and others wish to ignore the warning signs that the current pension system is in serious trouble, so be it. Fortunately, it will have little impact on me, but it will have a great impact on many taxpayers and certainly on pensioners. If you think CALPERS is great and that we can "grow" our way out of this (gee, where have I heard that before?), fine.

Like Concerned Parent, I do take issue with your statement "recognize that you yourself (sic) are, or will be, benefiting from a defined benefit plan paid for by current taxpayers. It's called Social Security."

As they say on SNL, "really."

But the real irony is your next comment "SS needs some pretty fundamental changes including reducing benefits, raising retirement ages, and increasing the payroll tax." So you call Social Security a FIXED benefit and in your very next breath say it needs some adjustments like reducing benefits, raising retirement ages... You know, Steve, that doesn't sound so FIXED to me. Social Security is anything BUT fixed.

And those fundamental changes that you propose for us are no different than those we are proposing for the public employees. So I thank you for that unintentional admission.

Finally, what is your source that 20% of companies provide fixed benefit pensions to its employees? I don't know of any companies that do this and couldn't find any in a quick search. Can you cite your source? (I think you may have this confused with individual workers who purchase annuities for their retirement - hardly the same thing.)

Posted by POGO
a resident of Woodside: other
on May 13, 2010 at 11:10 am

One thing I forgot to add, sorry...

One of the reasons that American workers are so productive - statistically - is that there are so few of them. Labor intensive work has long since gone to places like China, Costa Rica, India and Singapore. What's left in America are largely fully-automated or semi-automated factories where relatively few workers oversee machined operations.

As I've said before, if you owned a high volume shoe or clothing company, it would be impossible to compete if you didn't produce overseas.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 13, 2010 at 1:06 pm

POGO -

My source for the 20% defined benefit (pension) plan is a Bureau of Labor Statistics report Web Link . The cogent sentence from this report is: "Forty-three percent of private-industry workers had a defined-contribution plan and 20 percent had a defined-benefit plan." I was surprised too that private pensions are still that common.
I think we're closer to agreement on things than our sparring might indicate. The title of the article that begat this thread is "Menlo council set to impose two-tier pension system". I actually support this move on the part of the Council because I think, as you do, that the pensions have become too generous. I think that what the Council did is fully appropriate and shows they are responsive to the people who elected them.
My problem is with the pension reform initiative, which to my way of thinking subverts our representative democracy and ties the hands of those we elect. I think we all agree that the initiative process has become over-used in this state and is, in great part, responsible for the fiscal and political mess the state finds itself in. Even the California Supreme Court has criticized the state's reliance on the referendum process, arguing that it has "rendered our state government dysfunctional." I think this pension reform initiative is just a local version of the same thing and I oppose it, not because I disagree with it's stated goal (which the Council has rendered moot anyhow) but because I believe the initiative process should be used only very rarely, if at all. We always have the option of voting the bums out if they don't do what the majority of us want.
I also am not as upset as you that we taxpayers are on the hook to make up the shortfall for pensions for city employees. We certainly rode the gravy train during the 80's and 90's as CALPERS returns (as high as 35%!) reduced our taxload by covering these costs. Now we have to shoulder our responsibility to cover this liability. I happen to believe CALPERS performance will return and reduce or eliminate this tax burden once again. You're not so optimistic. In either case, I think we agree that this is the right, not to mention legal, thing to do.
A new and separate argument might started as to whether defined benefit plans for government employees should be converted to defined contribution plans. I suspect that would end up costing the city more in the long run since contributions into Employee 401K plans would be a fixed % of the employee budget and would only go up as employees were promoted and got raises. There would be no CALPERS fund to reduce retirement contributions during boom times.
I was never a big believer than 410K plans benefited the employee more than the old pensions did. I think it was clear that companies did it because it benefited their bottom line, not that of their employees. Getting rid of government pensions just to make them more like private retirement plans is a race to the bottom.
I hope to see you at Borrone's next Thursday too.

Posted by POGO
a resident of Woodside: other
on May 13, 2010 at 3:00 pm

First, thanks to Peter for the very kind invitation. I will be there, of course, and promise to not to throw food.

Second, thank you, Steve, for the excellent citation about the prevalence of private defined benefit plans. I'm still not sure it's apples to apples but it is very surprising that these plans still exist.

You opened up a can of worms about 401(k)s, however, which I believe should replace Social Security and get the government out of the retirement business. Social Security was never intended (read your Roosevelt) to be the sole retirement plan for Americans, only a safety net. Somehow that has changed over time.

Remember, 401(k)s have the major advantage that you OWN them and CONTROL the money inside them (at least we do for now...). Additionally, they are part of your estate and the money you paid in is not forfeited should you die before retirement age as it is with most pensions and with Social Security. If the same percent that now goes to SSI were placed into a 401(k), a relatively average worker with relatively modest returns will end up with a several hundred thousand dollar nest egg at the end of their career.

And, anticipating your next question ("what happens if they put all their money into Enron?") there should certainly be limitations on the investment profiles and risk that are permitted. All major 401(k) investment firm provide retirement date targeted funds which automatically reduce risk as the client approaches retirement age.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 13, 2010 at 3:39 pm

POGO -
Yes, this defined benefit/contribution debate is a big can of worms, perhaps worthy of discussion on it's own thread.
I found a Motley Fool article Web Link that reported on a study by the Center for Retirement Research at Boston College. To summarize, this study of the two types of retirement plans found "that 401(k) plan participants aren't doing as well as employees who have access to traditional defined benefit plans." The study came out in 2006 so it didn't even include the huge losses most funds experienced with the recent market crash. I expect if it were repeated today, the advantage of the pension plan would be even greater. Although this wasn't the cause of the performance difference between the plans, what was most distressing was the study's finding that "nearly half of all 401(k) plan participants have either all of their money or none of their money in equity investments."
Say what you will about the potential for greater returns, this last finding tells me that most people are too uninformed about investing to turn over this responsibility to them, at least without some sort of massive education campaign. Besides, if the average results are the same or better with a defined benefit plan (ie. pension) is it really in society's or the individual's interest to move everyone into a 401(K) plan to begin with? Isn't it a massive and fruitless waste of people's time to make everyone into a wall street investor? Better to pool their money and let professionals handle the investments, ala CALPERS. Of course 401(k)s have been manna from heaven for all the Wall Street brokers and investment banks who get rich handling all this new money.
A few things to ponder anyhow . . .

Posted by Rob from the poor
a resident of Menlo Park: other
on May 13, 2010 at 4:28 pm

So I've read along for a while, and just wonder where the City Management is in all this. They are the ones making the HUGE salaries, with more than generous benefits.. I don't see them taking a pay cut, or changing their pension. I continue to hear the pity party about having to give up their $4,000.00 bonus... We'll if it is a bonus, you shouldn't expect it, as it is just that. So the Rich get rich, and they take from the lowest paid in the city---- And again it's not like you start your job one day and retire with a full salary 2 years later- Most who retire with a decent salary have served the city for 30 plus years, and are deserving.

Posted by POGO
a resident of Woodside: other
on May 13, 2010 at 5:03 pm

Steve -

But the big difference is that 401(k)s don't just fund retirements, they build WEALTH. There's no denying that those funds are yours and your estates. And best of all, it gets the government out of the Social Security business (over time, of course).

And I knew the "education" question was coming which is why I noted that there should be specific choices of funds (available from any bank or firm) that must be employed. This would be a terrific source of funds to fuel our economy, it would be a tremendous source of funds (better than China...) for the US Treasury and bonds from state and local governments. No reason citizens shouldn't get that interest.

So let me ask you this. If you were 25 years old and yet to enter the workforce, would you rather put 7% of everything you earned over the next 40 years into Social Security and, provided you live that long, get back a few thousand dollars a month until you die OR put that money into your own investment account and end up with something on the order of $500,000 or so when you're ready to retire?

The answer to that question is very telling.

If that wealth-building system is truly superior to SS, then we just need a Congress willing to touch the third rail and figure out how to get us there. Anyone who is already on the SS system will be, unfortunately, limited to the SS benefits.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 13, 2010 at 5:37 pm

POGO -
I can tell it's going to be an interesting lunch.
I'm out of town this weekend so won't be back on-line until Monday.
I look forward to continuing this discussion then, or bumping into you and Peter on some new thread.
I'll concede that your point about building wealth merits some more thought.

Posted by Roy Thiele-Sardina
a resident of Menlo Park: Central Menlo Park
on May 13, 2010 at 8:46 pm

Steve (et al.)

most of the "private" defined pension plans belong to Union Healthcare Workers and Union Transportation Workers according to the US Bureau of Labor and Statistics.

In 1974 there were 250,000 defined benefit plans by 2004 it had dropped to 74,000.

The number of "terminated" defined benefit plans (meaning plans that were terminated and converted to defined contribution plans) was highest among high population jobs (jobs with larger workforces)

According to Pension Benefit Guaranty Corporation, there are currently 10,000 defined pension systems that are in the process of collapse/bankruptcy. in that case Pension Benefit Guaranty Corporation would takeover the pension, and would pay out a MAXIMUM of $12,400 per year. In the case of Steelworkers in Akron Ohio, they will receive 26% of there previous pension payments......

This is the major difference between private and public pensions. In the case of the Public Pensions we the taxpayers must make those pensions whole with increased contributions (i.e. MPK is now contributing over 14.5% to PERS for Misc. Employee Group (climbing to 2 in 2014) and over 34% (climbing to 45% in 2014) for the Safety Employee Group) So WE the Menlo Park Taxpayers are burdened with these unsustainable costs.

Posted by Roy Thiele-Sardina
a resident of Menlo Park: Central Menlo Park
on May 13, 2010 at 8:53 pm

Here are some statistics on Defined Pension systems. Of interesting note is that IBM is one of the largest single employer pension systems and it is no longer active, they moved their employees to defined contribution sometime ago.

"One cannot be both a progressive and be opposed to pension reform," argued Gov. Arnold Schwarzenegger's top pension advisor, David Crane, during a hearing Monday.

"The math is irrefutable that the losers from excessive and unfunded pensions are precisely the programs progressive Democrats tend to applaud. Those programs are being driven out of existence by rising pension costs."

Yet, it's clear that the progressive Democrats who run California's Legislature have no intention of doing anything to anger the state's public employee unions. Union leaders and activists filled the committee room to speak out against Senate Bill 919, which would increase retirement ages and decrease defined pension benefits for newly hired state employees. The new levels would still be far more generous than pension plans in the private sector, but the state's private-sector workers don't register on the Democratic radar screen ---- except when the party is looking for new targets from which to extract additional taxes.

Reality time: There is no chance California's Legislature will embrace even modest reforms to its public employee pension system, which has a liability estimated by Stanford University researchers to be as high as $500 billion. The committee didn't get a quorum to take a vote.

Republican Sen. Dave Cox, R-Fair Oaks, stated the obvious: This bill will never get out of committee and the only hope for reform is in the initiative process. Because unions have the ability to raise political funds from member dues and have armies of foot soldiers to engage in campaign warfare, statewide initiative reform is a tough road as well, but there are few other options.

Union officials insist that unfunded liabilities don't mean much because of natural market fluctuations. All will be well, they say, when the economy rebounds.

But Crane reminded listeners that the "state pension obligations are no different than state debt obligations, which also are promises to pay amounts in the future." These are fixed debt obligations ---- no different than any other debts incurred by the government, except that they are not capped and not subject to public approval. And, Crane warned, "Pension payments are senior obligations of the state to its employees and accordingly have priority over every other expenditure except Proposition 98 (i.e., K-14) expenditures and arguably even before debt service."

It's understandable that unions take the "don't worry, be happy" approach toward pension obligations. They get theirs no matter what. But any legislator who believes that such obligations don't harm programs or endanger the state's budget is not dealing with fiscal reality.

Anyone who trusts the scandal-plagued California Public Employees' Retirement System as an honest broker on pension matters is delusional. CalPERS testified against SB 919 and made new projections to soothe legislative worries.

In referring to CalPERS' 1999 plan to retroactively increase pensions, Crane argued, "It's nothing short of astonishing that the CalPERS proposal, which promoted the largest non-voter approved debt issuance in California history, was not accompanied by disclosures of risks or conflicts of interest. Frankly, I've never seen anything like the CalPERS sales document, which makes even Goldman Sachs' alleged non-disclosure look like child's play."

When CalPERS pitched that fiscally disastrous idea in '99, Crane added, it never revealed that the state would be responsible for any shortfall in investment returns, that its assumed investment returns required "the Dow Jones to reach roughly 25,000 by 2009 and 28 million by 2099," that the state had no cap on potential taxpayer liabilities, that its own employees would directly benefit from the pension increases, and that CalPERS' board members "had received campaign contributions from beneficiaries of the legislation."

But, if Monday's hearing is an indication, legislators are still listening to CalPERS' empty promises and ignoring the more reasonable warnings made by Crane and other pension town criers. Committee Democrats also seemed to accept the argument by union representatives, who insisted at the hearing that any pension matters should be handled at the negotiating table, even though such negotiations have resulted in the current fiscal train wreck. Unions are at their strongest at the bargaining table, especially when one considers that the government staff supposedly representing the taxpayers usually also benefit from any gains the unions achieve.

For instance, Sen. Denise Ducheny, D-Chula Vista, mocked the bill because it won't do anything to fix current budget problems (it will take years before the new savings from the new hires are realized) and because it deals only with state workers ---- not the many local agencies that pay equally generous packages to public employees. That seems to argue for a tougher bill that took on current employee benefit packages, but Ducheny wasn't advocating for that approach, but for the do-nothing preferences of her union allies.

The bill's progressive foes never responded to Crane's point that "All the consequences of rising pension costs fall on the budgets for programs such as higher education, health and human services, parks and recreation and environmental protection that are junior in priority and therefore have their funding reduced whenever more money is needed to pay for pension costs." It's no wonder. There is no serious response to that dead-on argument.

That's why the loud and surly union crowd did what unions always do ---- engage in a show of force rather than forceful argumentation. In the union worldview, the system works fine ---- any problems are the result of "Wall Street." And, of course, if taxpayers would only pay more to the state, all would be well with the world.

As the Retired Public Employees Association argued in a letter to committee Chairman Lou Correa, D-Santa Ana, in opposition to SB 919:

"RPEA disagrees with the assertion that California's public employee pension system is broken.

"California's system of providing retirement security and healthcare for our hard working public employees has worked for years ---- and is working now. It is a well managed system that allows us to recruit and retain good public employees, while keeping the promise made to them for secure, fair and well earned retirement."

Well, there's no question the system does work well for its government retiree beneficiaries. It would be nice, however, if California's majority legislators occasionally thought about taxpayers or some other constituency.

Unless the economy comes roaring back, pension obligations will continue to sap the budget and create pressure for cuts and business-busting tax hikes.

This sets the stage for an eventual statewide initiative battle, which could rival the importance of 1978's property-tax-limiting Proposition 13. This could be the beginning of a wild ride.

STEVEN GREENHUT is director of the Pacific Research Institute's www.calwatchdog.com journalism center. Comment online at nctimes.com/opinion or sgreenhut@calwatchdog.com.

Posted by POGO
a resident of Woodside: other
on May 17, 2010 at 8:33 am

As you know, it's budget time in Sacramento.

Well, even Senate President Pro Tem Darrell Steinberg (Democrat) now agrees our state's current financial situation is unsustainable - a word many of us have been uttering for quite some time.

"There is no more triage," Senate President Pro Tem Darrell Steinberg said minutes later. "The status quo is not sustainable."

From the Sacramento Bee's Dan Walters: They could overhaul a public pension system whose costs are increasing exponentially, a much-too-expensive prison system, a boom-and-bust tax system, and a welfare system in a state with just 12 percent of the nation's population but a third of its welfare recipients.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 17, 2010 at 12:55 pm

Roy -
Just getting back from a weekend wedding in Wisconsin.
I knew a high-level researcher who working at IBM-San Jose when they were converting from defined benefit to defined contribution. He wasn't happy at what was happening, as were many who saw their pensions converted into 401(K)s.
Just because all these companies did this doesn't mean it was the right decision. The study from the Boston College research group I mentioned found that "that 401(k) plan participants aren't doing as well as employees who have access to traditional defined benefit plans." So for all the promise about wealth accumulation, it seems the main beneficiaries of 401(k) plans are the employers and the Wall Street investment firms.
But wrt your pension initiative, you didn't address my main reservation which I restate here:
"My problem is with the pension reform initiative, which to my way of thinking subverts our representative democracy and ties the hands of those we elect. I think we all agree that the initiative process has become over-used in this state and is, in great part, responsible for the fiscal and political mess the state finds itself in. Even the California Supreme Court has criticized the state's reliance on the referendum process, arguing that it has "rendered our state government dysfunctional." I think this pension reform initiative is just a local version of the same thing and I oppose it, not because I disagree with it's stated goal (which the Council has rendered moot anyhow) but because I believe the initiative process should be used only very rarely, if at all. We always have the option of voting the bums out if they don't do what the majority of us want."
Would you please respond to my criticism of your use of the initiative process? I think the initiative process, by tying the hands of our representatives, threatens our representative democracy far more than the pension deficit that it seeks to correct.

Posted by Menlo Voter
a resident of Menlo Park: other
on May 17, 2010 at 1:52 pm

Steve:

of course they weren't happy with the transition away from defined benefits. They no longer had a guaranteed amount of money every month for their retirement. Private industry made this change long ago because they long ago figured out if the pension didn't make enough ROI the company would be left holding the bag (kind of like the tax payer with the public worker pensions)and they didn't want to be stuck with that liability. We should learn something from them.

Posted by Menlo Voter
a resident of Menlo Park: other
on May 17, 2010 at 1:54 pm

Oh, Steve, the politicians need to have their hands tied. They have demonstrated again and again and again that they cannot be trusted on this issue. Why do you think the council's proposal didn't include not being able to make changes retroactive? It's so they can serve their union masters.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 17, 2010 at 2:06 pm

We live in a democracy which means a government of the people, by the people and for the people. When those whom we elect fail to represent us as we feel we should we can either vote them out of office (which takes time and means overcoming their substantial financial support from those whom they are actually serving) or we can correct their decisions by citizen initiatives (which require a lot of citizen effort but which are less susceptible to the corrupting influence of campaign contributions). Both methods are important tools in ensuring that our elected officials serve the citizens and not other interests.

Posted by POGO
a resident of Woodside: other
on May 17, 2010 at 2:45 pm

Steve -

I agree with you that the initiative process in California often leaves a lot to be desired. It sometimes results in tying the hands of the legislature in a bad way, like mandating that certain percentages of spending go to pet projects.

In this case, I think the initiative by Mr. Thiele-Sardina MADE the Menlo Park City Council stand up to their public employees and demand (even impose) reform. Knowing citizens were behind them - even insisting on this change - was critically important. Without the initiative, I'm pretty sure these elected officials would have caved like they usually do. Knowing voters were irate was a big part of this process.

I think you're going to see this cycle of voter anger followed by capitulation of the legislature continue into the future as our fiscal crisis deepens.

Posted by Roy Thiele-Sardina
a resident of Menlo Park: Central Menlo Park
on May 17, 2010 at 2:45 pm

Steve

There are a number of cities that require voter approval to increase pensions (the most famous being San Francisco) and that has NOT tied the hands of their council. If the council believes we need to raise the pensions, all they have to do is ask the voters and convince us. If it's that compeling, we shuld go along with it. It's why the initiative process was invented.

Posted by sailor
a resident of another community
on May 17, 2010 at 5:50 pm

Very interesting thread you have here. Isn't San Francisco a Charter city while Menlo Park is a General Law City subject to the governess of state law. So in some regards isn't that like comparing apples to oranges. I am curious to know how that applies or if its relevant at all?

WIKIPEDIA: charter city is a city in which the governing system is defined by the city's own charter document rather than by state, provincial, regional or national laws. In locations where city charters are allowed by law, a city can adopt or modify its organizing charter by a majority vote of its resident citizens. A charter gives a city's residents the flexibility to choose any kind of government structure allowed by law. For example, in California, cities which have not adopted a charter are organized by state law. Such a city is called a General Law City, which will be managed by a 5-member city council. A city organized under a charter may choose different systems, including the "strong mayor" or "city manager" forms of government

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 7:34 am

Menlo Voter -
You and others say that the Council is in the pockets of the unions but I've yet to see anyone present any evidence of that. The Council is composed of citizens like you and me, serving for a couple terms before returning to "civilian" life. They got into city government because they are civic minded, not because they want to get rich. Your charge of them being servants of the unions implies some level of corruption, a pretty severe charge for which you should have good evidence.
As for the IBM employee who objected to the conversion of his pension to a 401(k): he was one of their head researchers who, over many years of loyal work, had added many millions of $ to IBM's bottom line. IBM could easily have afforded to fund the pension plan but instead, they saw an opportunity to get out from under a responsibility to their employees, which probably increased their stock price for a while and gave big bonuses to management while screwing the workers like my friend who had done the work to make it a success.
After that betrayal, my friend quit and went to work in academia.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 8:18 am

Roy -
The initiative process is an example of 'direct democracy'. The founding fathers considered it when drafting the constitution but wisely chose representative democracy instead, having learned from the ancient Greeks the problems inherent in direct democracy for groups larger than about 5,000 people.
Direct democracy was introduced into California politics about 100 years ago in a desperate attempt to wrest control of the political process from Southern Pacific, which controlled the legislature, the courts, and the press Web Link
Somehow I don't think our city Council is quite in that league yet. Nor, therefore, do I think it appropriate to bring out the "big gun" of the initiative process to rectify what most recognize was a mistake (overly generous pensions), a mistake that is being fixed. Given the unintended consequences of prior initiatives such as Prop 13, term limits, guaranteed school funding, and 3-strikes it's clear that initiatives can cause much more harm than they cure.
Remember, the more generous pensions were given to employees in 2007 when the economy was in great shape. Besides, CALPERS, having earned 16% on it's investments the previous year, was covering employer contributions anyway. It seemed a good idea to reward loyal employees who were being left out of the boom times. Who among us, if we knew then what we know now, wouldn't have handled some financial decisions differently? So it was, I believe, with the Council and our city employees.
Now, 3 years later and after a market crash second only to the Great Depression, everyone has sobered up, including the unions, who recognize that their members' pay & benefits are now out of line. Our Council, perhaps swayed by the initiative petition but more likely swayed by the red ink they saw in their own budget projections, passed the two-tiered pension system and began to fix the problem.
This pension reform initiative is therefore superfluous and no longer necessary. Our representative process is working like it should. We do not need to risk the unintended consequences of another initiative run amok to fix something that is not broken.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 8:23 am

Peter -
The unions took out there own ads in favor of candidates that they felt would represent their interests best. They did not contribute directly to the candidates' campaigns. There is a difference.
Bottom line: I believe the council members have more integrity than you give them credit for.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 18, 2010 at 9:01 am

Steve states:"The unions took out there own ads in favor of candidates that they felt would represent their interests best. They did not contribute directly to the candidates' campaigns. There is a difference. "

If someone buys something for me instead of giving me money, there is a difference? I don't see the difference except that it is a clever ploy to distract from the fact the money buys elections and the unions are the BIGGEST contributors to local elections. What do you think they are spending so much money for - to make sure that the citizens' interests are well represented?

Posted by POGO
a resident of Woodside: other
on May 18, 2010 at 9:14 am

Steve -

If you don't object to indirect contributions by unions, I have to assume you don't object to corporations running support ads for candidates or issues either? The Citizens United decision by the Supreme Court probably wasn't an issue for you...

Posted by Menlo Voter
a resident of Menlo Park: other
on May 18, 2010 at 11:49 am

Steve:

if you don't think some of the city council are in the pockets of the unions then you just haven't been paying attention. The unions spend money to help these people get elected. You can bet they don't do it out of the goodness of their hearts. They expect some quid pro quo.

Also, the initiative is decidely NOT superfluous and unnecessary. What the council did, did not go far enough. There is nothing to stop the council from giving retroactive raises in benefits. You can bet when the economy improves that will happen unless we tie their hands and prevent it. Same thing goes for changing the 2% factor or the retirement age. Without the initiative nothing stops this council or any future council from undoing what has been done. Our community simply cannot afford for that to happen.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 12:51 pm

What no one seems to want to acknowledge is that the initiative process is a back-door process that has been badly abused in this state. It is a direct affront to our representative system of government and should be used only as a last resort.
Neither is there acknowledgment that the current situation of overcompensated city employees is a direct result of an economy that went from boom to bust within a year and that everyone in government is working overtime to try to adjust to the new fiscal reality. This includes our city Council, who are doing exactly what they need to to stop the red ink. They should be applauded for being responsible and reversing their 2007 decision, not threatened with an initiative that won't tie their hands so much as it will tie the hands of their successors.
Our system of city government has worked pretty well for the past 80 years - is it that broken that we need to resort to this? I for one, don't think so.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 1:35 pm

Menlo Voter -
I know several of our council people personally and I'm pretty sure that none of them are "in the pockets of the unions" as you put it. They are just civic-minded citizens who give copious amounts of their free time to attend to city business for god knows what reason. I don't believe they are paid exceptionally well for this duty, though I admit to not knowing what their pay is. Does anyone have that info?
I don't always agree with their decisions but even though I contributed $$ to the campaigns of two of them, I don't expect them to switch their votes to accommodate me. These folks have too much integrity to be bought off by me or the unions.
I fear you've become so cynical about government at all levels that you see all government officials are corrupt.

Posted by POGO
a resident of Woodside: other
on May 18, 2010 at 2:30 pm

Steve -

First, there's a big difference in your $100 donation and the threat of an entire public employee union (SEIU) working against the re-election of a public official. Just ask Schwartzenegger how well his initiatives fared when the union turned on it's PR machine. All four of the initiatives failed badly (after polls initially showed public support for all).

With regard to your comment that it has worked well for 80 years, the initiative process covers the majority of those 80 years, so you may want to include them in your accolades. I have previously stated my concerns with the initiative system - which has frequently been abused by citizens AND by our legislature who often "punts" issues to initiatives to avoid votes - but it's part of California's governance. Initiatives have brought us Prop 13, HSR and stem cell research. I'll let readers draw their own conclusions.

I don't think anyone has ever taken issue with your comment that "the current situation of overcompensated city employees is a direct result of an economy that went from boom to bust within a year..." So I'll acknowledge that for you. I'm just thrilled to see your admission that they are OVERCOMPENSATED. That needs to be corrected and it's going to be painful, just like it is in the private world where we lay off people, reduce salaries and cut benefits.

Our issue is the intransigence of public employees who don't seem to accept the fact that the current level of benefits is UNSUSTAINABLE. They seem to think this is all a conspiracy by conservatives.

Posted by POGO
a resident of Woodside: other
on May 18, 2010 at 2:34 pm

One last thing, Steve.

I think that the initiative by Mr. Thiele-Sardina provided those elected officials the mandate (read: cover) to make these changes. The fact that those officials deliberately eliminated voter approval for future increases (over the current level of benefits) shows that they want the flexibility to reinstate them. We don't.

And we'll never know what Council Members would have done without that initiative floating over their heads but their past behavior does not instill confidence.

Posted by Menlo Voter
a resident of Menlo Park: other
on May 18, 2010 at 3:09 pm

Steve:

please tell me what council members you think are not in the pocket of unions. If they accepted no donations form, nor had any advertisements, etc, paid for by the union I'll go along with your belief. However, as POGO said, if the unions want to turn on their PR machines they can make life very uncomfortable for council members. Especially those that want to be reelected.

Will you also please tell me if the initiative does not go through what there is in place to stop this council or future councils from changing things and puting us in this position again?

Posted by stop the nonsense
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 4:04 pm

I support the pension initiative, but I really wish people would stop talking such black-and-white nonsense. To say these council members are in the unions' pocket is just offensive and disgusting. These are hard-working individuals who care about their community. Of course they're going to make mistakes. Can those of you who are making the harshest accusations say you don't make mistakes? In fact, have any of you run for council or any other office that would require you to donate so much of your free time and struggle to see the big picture in an attempt to make good decisions?

This employee pension problem isn't brand new. People were getting very nervous about it long before the economy tanked. I seem to remember the Almanac writing several stories about it years ago, and recall that at least one state or county elected official was quoted, calling the pension situation a ticking time bomb.

Since then, Menlo Park has had council members of every stripe, and they all continued to approve richer employee benefits. They were all misguided and they probably regret their decisions now. One former council member is one of the instigators of this initiative because by now she has realized what a mistake she participated in.

Support the intiative or don't, but please stop vilifying good people trying their best to make your community a better place to live.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 18, 2010 at 4:48 pm

Menlo Voter -
You ask "Will you also please tell me if the initiative does not go through what there is in place to stop this council or future councils from changing things and puting us in this position again?"
Answer: The same thing that's been there for the past 80 years - elections. If the bastards don't do what they're elected to do, throw them out at the next election. That's how our representative government is supposed to work. We don't have to resort to a special initiative every time they do something we don't like. Just wait a year or two and if they haven't fixed things, throw 'em out and get somebody else in who will.
The initiative process was developed to respond to a specific special interest, Southern Pacific Railroad, which had bought off the legislature, the courts, and the press. It worked to wrest political control back at the time but it has gone on to become a monster that is out of control.
Certainly our Council is no Southern Pacific Railroad. Nor does it require the extreme measure of a special initiative to get them to respond. In fact they have responded with the 2-tiered pension. If they choose to re-instate the increases, as POGO worries, I expect there will be hell to pay at the next election. And that's exactly as it should be.
Don't tie the hands of Councils yet to be elected. That's what's created the chaos we see in Sacramento. Do you really want to visit that kind of paralysis on our city too?

Posted by Menlo Voter
a resident of Menlo Park: other
on May 18, 2010 at 5:54 pm

Come on Steve, you know as well as I do "throw the bastards out" doesn't work. It's one reason we have term limits in this state. It is all but impossible to turn out an incumbent. Yes, sometimes it happens, but it is the exception rather than the rule. So, sometimes the initiative process is necessary if the will of the voters is to be heeded.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 19, 2010 at 8:12 am

Below as predicted - the assessment on cities will come in the Fall:

SACRAMENTO  Facing massive investment losses, a key committee of California's giant pension fund voted Tuesday to make the state increase its contributions to employee retirement benefits by $600 million in the coming fiscal year.

The contribution increase would be for one year starting in July, but the California Public Employees Retirement System is likely to require similar increases in future years.

Posted by Steve
a resident of Menlo Park: Central Menlo Park
on May 19, 2010 at 12:33 pm

Menlo Voter -
You said: '"throw the bastards out" doesn't work. . . It is all but impossible to turn out an incumbent.'
Tell that to Winkler and Duboc. Seems to me Menlo Park has a pretty good record of turning out incumbents.
And if they aren't turned out then it is the "will of the people" that they should not be. An election after all is the gold standard of what the "will of the people" really is. Which is why elections of representatives are the way to go. You don't find mention of the initiative process in the US Constitution after all.
Don't you realize that the initiative process has become a tool of the special interests? On a statewide basis, any group with a million dollars can pay to get enough signatures to get an initiative on the ballot. Another million or ten for advertising and a majority can be convinced it's a good thing. In this case, the special interest, ironically, includes one of those who were turned out by the voters, making it smell a bit like a revenge initiative. Fortunately, people in Menlo Park are smarter than the average voter so it's harder to pull the wool over their eyes.
Which is not to say I think the initiative can't pass in Menlo Park. I fall back on my position that, because it's an initiative, it shouldn't pass.

Posted by Menlo Voter
a resident of Menlo Park: other
on May 19, 2010 at 3:42 pm

Steve:

the problem with doing this without an initiative is that it takes time to throw the bumbs out and they can do a hell of a lot of irreversible damage before they get thrown out. Witness retroactive benefits increases and the reduction in age of retirement. These things cannot be undone now and we will be paying the price for a long time.

I agree that the initiative process in this state has largley become a tool of the special interests, but there are times when it is not and this is one of them. We can't afford to have politicians in office that can be manipulated by the unions so that we are put in the position of financial disaster.

Posted by Virginia Chang Kiraly, 2008-2009 Foreperson, SMCCGJ
a resident of Menlo Park: other
on May 20, 2010 at 5:57 pm

Cross posted from another topic:

Here are the links to three Grand Jury reports that I hope the public will read:

one from from Ventura County about unfunded liabilities in Ventura County; one from Sacramento County about unfunded liabilities in that county's school districts; and the report from San Mateo County that Kelly Ferguson attacked in a council meeting last August by trying to politicize the report when, in fact, it is statutorily mandated that AT LEAST 12 members (out of 19) of a civil Grand Jury vote on a report and move it forward to public distribution. Note that approving a Grand Jury report for public distribution does not happen by a simple majority:

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 21, 2010 at 7:41 am

Truth? states:"Where is that sudden drop in property taxes you tried to stir up?

You were wrong, Peter. Property taxes are projected to increase, which is saving the city, but is something I told you would happen when you tried to get everyone in a panic."

In 2008 I predicted that "Housing prices and hence property taxes will be depressed for at least another two years".

Well now the FACTS are available for Santa Clara County, and the data for San Mateo County will be available shortly, and the REAL TRUTH is:
"The crash in once high-flying Silicon Valley home prices came into sharper focus Thursday when county officials announced a new record in the number of properties that have dropped in assessed value.

All told, 118,440 houses, condominiums, duplexes and commercial properties will see their assessed values lowered by a total of nearly $21.4 billion. To put that in perspective, just 4,442 properties in 2006 saw assessed values drop, with losses totaling less than $3 billion.

Assessor Larry Stone called the numbers "historically off the charts."

Stone expects total assessed values in the county to fall by 1.5 percent this year compared with last."

There is no reason to believe that the San Mateo County figures will be substantially different and now is the time for local agencies to revise their revenue estimates DOWN from their currently projected 1-3% increase in property taxes to a more realistic zero to minus 1%.

Posted by POGO
a resident of Woodside: other
on May 21, 2010 at 7:46 am

For those of you who still believe all of the concern about unfunded pension liabilities is nothing more than a conservative plot against unions, I offer two links from today's New York Times that discuss how serious this problem is for New York and, what they refer to as the poster child for this problem, California.

Posted by Blue Collar Public Worker
a resident of another community
on May 22, 2010 at 9:45 am

POGO
The PERS program does not accept overtime toward the pension benefit. This was tested by some Las Lomitas District Bus Drivers back in the early 90's and did not fly, I agreed then and agree now with that decision, it can ever be fair. I see how Yonkers could be in trouble with their pension fund with issues like this and agree it needs to be fixed ASAP.
BCPW

Posted by POGO
a resident of Woodside: other
on May 22, 2010 at 10:40 am

BCPW -

You are consistent in that you selectively extract a single piece of data from an article - usually the most inconsequential point - and use it to justify your position. You ignore all of the other points which are far more important and compelling. If the only thing you gleaned from the TWO front page articles from yesterday's New York Times was that overtime inclusion is the key problem, then you missed the entire point.

But I'll accept your admission and concession. Gee, I have a sudden urge to rearrange deck chairs.

Now if you could also understand that CALPERS may lose anothee 10-15% of assets during the first half of 2010 due to their poorly conceived strategy of overweighting equities and real estate - two of the market's weakest segments. One of the NY Times articles noted a growing movement to split all pension contributions into two separate funds - one a definited contribution fund, the other a defined benefit fund. It's that kind of thinking that may make allow municipalities and employees to squeak through this crisis.

Or, you can continue to say this is all just a conservative plot and that everything at CALPERS will be okay. I had a old college chum who worked at Lehman who said the same thing.

Posted by Blue Collar Public Worker
a resident of another community
on May 22, 2010 at 11:28 pm

POGO
I pointed out that I had first hand knowledge of this issue from personal experience. I found it interesting at the time because at first when the subject was brought up about employees getting PERS credit for overtime it seemed only fair to me. However after much discussion and input from the Bus Drivers, Union Reps, Business Managers etc. Some of us thought some of the things that could happen were exactly what happened in Yonkers, so Las Lomitas and PERS did not count OT then and do not today. Wow responsible Public employees, sounds weird, believe it or not there are some good ones, I feel like a donut, um donuts.
I was unaware that this was a reading assignment and certainly unaware that I would be graded and ridiculed for only commenting on a portion of the article. Going forward you have described me as the antagonist on these strings however it would appear that lately you would fit that description much better than I. POGO not all of my knowledge is from the PERS Myth vs Fact site. To tell you the truth I have learned a few things from you along the way and frankly I do have allot of first hand knowledge of this subject if for no other reason than it has rubbed off during my years of employment as a Public Worker. One common thing I see in every one of these newspaper articles is the entire tenor is always the same. Exaggeration of the issues, of course that's what gets people to look at and read the paper. Are there issues with the PERS system yes but I do not believe it is as bad as you think. Here is a good example of why people like me take the stand we take. Some years ago when the City of Sunnyvale went from 2% at 55 or PERS Misc to 2.75% at 55 the entire unit did not get a raise for 3 years and then if I recall correctly only got 1% a year for the next two. My point is and will always be a deal is a deal if it were the other way around we would have to live with it. But when it's on the side of the most powerful the Public Workers are going to be the losers.

Posted by POGO
a resident of Woodside: other
on May 23, 2010 at 9:24 am

BCPW -

Well, turnabout is fair play.

I appreciate your agreement that employees should not "load up" on overtime and other extra pay in their last years of employment so they can inflate their pensions. And while it MAY not happen where you have cited, unfortunately, it still happens every day through municipalities all over this country. And within those districts you cited, while they may not take overtime, they can work other shifts which also inflates income. It's a national scandal.

The two New York Times articles weren't a reading assignment; I provided them to show you the source of my data. But you obviously read them both because you cited data that was contained near the end of each article. (Perhaps you read from the end?)

I also completely agree with your point that "a deal is a deal" and it is for that reason that NO ONE (including me) has proposed changing current benefits, even though that's an enormous part of this problem. THE ONLY PROPOSED CHANGES APPLY TO NEWLY HIRED EMPLOYEES. For that reason, I don't understand the reluctance of the public employees to embrace this return to 2007 level pension benefits.

I also appreciated your comment that you have learned a lot from these exchanges. I have as well. But the most important thing anyone can learn - and unfortunately, it will be painfully apparent quite soon - is that the current unfunded pension liability problem is about to implode. There simply isn't enough to taxpayer money to bail out CALPERS anymore.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 23, 2010 at 9:33 am

Pogo states:"is that the current unfunded pension liability problem is about to implode. There simply isn't enough to taxpayer money to bail out CALPERS anymore."

And what everyone needs to understand, including BCPW and his union colleagues, that when the system implodes they will all suffer the consequences. Just ask the retired auto and airline employees what happened to their hard earned pensions.

The State of California is no longer capable of being the guarantor of the CalPers pensions and neither can the local governments. If the system is not fixed now then even the current retirees and the current government employees will suffer - and suffer badly.

I urge the union leaders to get out front in helping to solve this problem.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 23, 2010 at 9:31 pm

I very interesting question from a fellow taxpayer:

"Taxpayers pay to bail out CalPERS

OK, let me see if I understand this. Due to a downturn in the stock market, CalPERS lost money on its investments and "voted Tuesday to make the state increase its contributions to employee retirement benefits by $600 million in the coming fiscal year."

What don't they understand about government money? Before the government can give someone money, it must first take it from someone else  taxpayers.

Due to the same downturn, my 403(b) decreased in value. However, my taxes from the money I earn as a retiree on Social Security and a retirement annuity will be used to "bail out" CalPERS. Who do I ask, no, demand, to bail out my investments?

One important point in the study is that this problem WASN'T caused by the current downturn. The downturn only aggravated it. The problem is the commitment without funding. Compared to some other really awful states, California isn't SO bad, but since our state is so populous, our problem is necessary gigantic. Somewhere on the site is a "webinar" with streaming sound and a pretty good Q n A session with the presenters of the study.

Posted by Hank Lawrence
a resident of Menlo Park: Sharon Heights
on May 24, 2010 at 11:50 am

There is very little doubt that pension reform will pass. The San Mateo County Council on labor, the SEIU, and ASFME won't be able to con the voters this time. The issue has too high a profile and people are simply more engaged and informed. Try as the may, with misleading titles on their slick propaganda brochures, the people won't buy the Unions lies and distortions this time.

Now Heyward Robinson and Richard Cline should be made casualties in the upcoming election. They have repeatedly proven their fiscal irresponsibility, not just on pension reform, but on the trash rates as well. This is why they should be trashed. We need two responsible poeple to run who are dedicated to the residents, and who are not Union shills, to replace these two union stewards masquerading as City Council members.

Posted by Steve
a resident of Menlo Park: Allied Arts/Stanford Park
on May 24, 2010 at 12:28 pm

Hank, I agree.

What can be done with the current employees? Remember when Mayor Gavin Newsome wanted to fire everyone working 40 hours or more and then rehire them (or others)? Can something like that be done? How do we fix the fact that Glen Rojas and other managers in Menlo park make too much money?

Posted by No New Taxes
a resident of Menlo Park: Allied Arts/Stanford Park
on May 24, 2010 at 4:46 pm

Menlo Park's Council should adopt a "zero difference" model for ALL public employees (police too). the model says "we can afford to pay XX.X% of the general fund for services. (say 60%) which is $18M this year. That $18MM needs to include your pension payments, raises and overtime. So if the the police want a raise and to continue their overtime. Then they need to reduce headcount. We need to consider the "Total Cost Of Ownership" for the entire workforce and reduce accordingly. This would imply no raises, reduced overtime, having the employees pay more of their pension costs. it's the right fiduciary decision to make.

Posted by Virginia Chang Kiraly, 2008-2009 Foreperson, SMCCGJ
a resident of Menlo Park: other
on May 24, 2010 at 9:03 pm

To Steve-

In response to your statement... "What no one seems to want to acknowledge is that the initiative process is a back-door process that has been badly abused in this state. It is a direct affront to our representative system of government and should be used only as a last resort."

While I agree with you that the initiative process has been badly abused, unfortunately, this process may be the last resort for the people's voices to be heard. That is the reason so many Menlo Park residents were eager and willing to sign the petition and volunteer to help with the signature drive. I believe many residents of our surrounding communities feel the same way.

I also believe that citizens' watchdog groups like the San Mateo County Civil Grand Jury, which recommended many of the initiative's terms, are beginning to play more of an important role to keep "elected officials" accountable. This was also shown in the Grand Jury report about the South Bay Waste Management Authority (SBWMA) when former Mayor Heyward Robinson was "shocked" and "blown away" by the "lack of incentive to control employee costs" that resulted in Menlo Park residents' paying dearly for increased garbage rates, even though he did not act as the trusted fiduciary he was elected to be to represent Menlo Park residents.

The bottom line is when people feel hopeless with the political process, they take matters into their own hands. By doing so, it potentially damages a politician's "political career." Therefore, it is understandable and regrettable that Kelly Fergusson publicly exhibited hysteria and outrage toward the Grand Jury's report about reversing the upward trajectory of employee costs in San Mateo County cities and that Mr. Robinson has been hostile to parts of the pension reform and the SBWMA reports. Their embarrassing behavior confirms that the Grand Jury did its job in representing the people's voice, which is something these "elected representatives" have not done.

Congratulations to the citizens of Menlo Park for voicing their concerns and doing something about making Ms. Fergusson and Mr. Robinson accountable. You are a great example to all Californians!

Link to the 2008-2009 San Mateo County Civil Grand Jury reports:Web LinkWeb Link

Posted by Hank Lawrence
a resident of Menlo Park: Sharon Heights
on May 25, 2010 at 1:57 pm

Who is Victoria Chang Kiraly? I never heard of her. But if we were to apply Border Patrol's logic then Paul Collacchi should have his first amendment rights suspended with regard to Menlo Park issues since he does not live in Menlo Park. And all those SEIU and ASFME Union leaders should have no voice in Menlo Park issues if they don't live in Menlo Park. Now on to the Mercury News. Since it is in San Jose it should not allow editorial opinions on anything to do with Menlo Park.

Border Patrol, This is America and Obama has not been president long enough to suspend people's first amendment rights. But if for some reason he got a second term I wouldn't bet against it.

Posted by Roy Thiele-Sardiña
a resident of Menlo Park: Central Menlo Park
on May 25, 2010 at 3:48 pm

Border Patrol

Are you kidding me? You cast a stone at Virginia while you COWARDLY hide behind your anonymity. For all we know you live in Tijuana and your opinion should be void (as per the logic in your post). We will in the future discount anything you say based on your cowardice in this act.

For the record. Virginia is MORE qualified to discuss pension reform than most of the people who've opined on the forum about it. She's qualified because she was a member of the Grand Jury that did the report.

Also for the record. Virginia did NOT steer this ballot measure. Like many volunteers she helped. The only people who STEERED the most successful ballot measure in Menlo Park history were Henry Riggs and me, as Co-Chairman of "Citizens for Responsible Pension Reform"

Posted by Blue Collar Public Worker
a resident of another community
on May 28, 2010 at 7:14 pm

Roy,
Congratulations on your initiative passing, you and the supporters did the work. Now it is on the poles as they say, so will you consider an open and public debate? What do you have to loose at this point?
BCPW

Posted by POGO
a resident of Woodside: other
on May 29, 2010 at 8:28 am

BCPW -

So now you want to be taken seriously?

Aren't you the one who said "I don't care what any Stanford Study says or Roy or Henry or you for that matter..." [Your quote is about half way up this very page.] Do you think that kind of reply would make for a serious debate?

In one breath you dismiss arguments, which are almost always substantiated by a published citation or fact, like a petulant teenager. You offer no facts to substantiate your position other than a link to the same talking points web site. In the next breath, you beg to be accepted as a serious and reasoned voice of opposition. And all along, you do this anonymously! (And anticipating your attack for my anonymity, I'm not the one asking for a public debate.)

BCPW, it doesn't work that way. If you want to be taken seriously, conduct yourself accordingly. Integrity isn't a faucet that you can turn on or off as required. You said those things; you own them.

Mr. Thiele-Sardina has done his homework and legwork. He's the one who researched the problem, had the guts to propose a solution and took the time and effort to gather more than 3,000 signatures and deliver them to city hall. And he did it all publicly in the full light of day. And you say you "have allot (sic) to loose (sic)?" You poor thing!

Posted by Blue Collar Public Worker
a resident of another community
on May 29, 2010 at 11:21 am

POGO
Am I to assume this is your name or is this an alis? ( you really didn't think your disclaimer what help did you?) So are we all to assume everything you say has no validity, that's not fair is it? I have seen some good info from you and I told you so. Second of all I have been as rude as some and not as rude as most. The information I have provided has been information provided by the experts, not news papers and magazines or internet media articles. Finally I do have allot to loose if I were to expose my identity but I would do it because I am passionate about this subject. So what does Roy have to loose? If my side of the story is so easily condemned and dismissed then Roy should be able to make short work of me?
BCPW

Posted by POGO
a resident of Woodside: other
on May 29, 2010 at 4:37 pm

BCPW -

Actually, you haven't refuted the points that have been made with facts. You seem to have three points - (i) everything is going to be okay with Calpers (it won't), (ii) this crisis is overblown (it isn't) and (iii) even if Calpers comes up short on their investment returns that taxpayers should simply make it up (they won't). Your most salient point to date has been that unions once solved child labor abuse. Point duly noted.

On the other hand, your opposition has provided citations from several grand jury reports, from the California auditor and legislative analysts, the New York Times, the San Jose Mercury News, the Wall Street Journal and numerous offials at cities and counties on the verge of financial collapse because of unfunded pension liabilities.

Sorry, BCPW, this isn't about your passion or your opinion - we've heard you and no one seems to be very impressed. This is about an incredibly serious financial disaster that's about to drown our towns, cities, states and public workers.

What's that old saying - "if you're not part of the solution, you're part of the problem..."

Posted by Blue Collar Public Worker
a resident of another community
on May 29, 2010 at 6:36 pm

POGO
Thanks for your opinion but I really am not asking you I am asking Roy, do you speak for Roy? It's only fair to have an on the air or open discussion on this issue. So far all it has been is one side gives it's opinion the side give their's and so it goes. It just sounds like as far as yourself and MV are concerned because you disagree with me an open public debate is no good. My point is to let all of the voters in Menlo Park hear both sides of this issue it'nt how you do things in a democracy? Roy what do you say?
BCPW

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 29, 2010 at 7:37 pm

BCPW - you have done an admirable and lonely job of representing organized labor in this debate. Unfortunately the problem of unsustainable pensions will not be solved unless labor leaders themselves come to the debate with concrete proposals. Absent such union proposals this problem will be solved without consideration of the unions' interests.

Thank you again for enlightening all of us on the union perspective.
Now please ask your union leaders to come to the table of public dialogue and public opinion.

Posted by Blue Collar Public Worker
a resident of another community
on May 29, 2010 at 8:30 pm

Peter
As I have said before I am not a union member. However you may have a good idea. I really think the public should hear both sides of this issue, do you think that is fair? Honestly many of the average voters even have an idea of how the PERS or STERS systems work.
BCPW

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 29, 2010 at 8:34 pm

BCPW asks:"I really think the public should hear both sides of this issue, do you think that is fair? "

Yes, and that is why I beg the union leaders to enter into this debate - their absence speaks volumes about their priorities and their leadership and, I suspect, the absence of any good arguments against changing the current unsustainable pension system.

San Jose, Calif. The 2009-2010 Santa Clara County Civil Grand Jury today released a 33-page report titled Cities Must Rein in Unsustainable Employee Costs that says, "Employee costs are escalating in the cities of Santa Clara County, revenues are not keeping pace with these increases and cities are cutting services." The Grand Jury looked at rising wages, health insurance, pensions, and vacation, holiday, and sick leave and made recommendations to control costs.

The report is online here: CitiesMustReinInUnsustainableEmployeeCosts.pdf.

Mayor Chuck Reed released the following statement in response to the Grand Jury report:

"I want to thank the Civil Grand Jury for thoroughly exploring how rising employee costs have negatively impacted the ability of San Jose and the other cities in our region to provide services. The Grand Jury is correct. The current system is unsustainable.

Over the past nine years, employee costs in San Jose have risen 64 percent while the city's revenues have only gone up 18 percent. As a result, we have had to cut services to our residents and businesses year after year.

These out-of-control costs are why we can't keep all of our libraries, community centers, and swimming pools open. These rising costs are why we can't fill potholes, trim trees, or maintain sidewalks or landscaping to the level our citizens expect.

San Jose is facing a $118 million deficit in the year ahead and will have to close libraries and community centers and lay off hundreds of employees  including police officers and firefighters  unless we get concessions from our employee unions. Those concessions need to be ongoing, not just for a year or two, or else we will be facing the same difficult decisions next year.

I urge all San Jose residents make your voice heard as the City Council votes on this year's budget. E-mail me at mayoremail@sanjoseca.gov and get involved."

Compare that to the way that the Menlo Park Council trashed the San Mateo County Grand Jury's recommendations that cities needed to curtail excessive employee wages and benefits.

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 30, 2010 at 6:09 am

A great comment in the SJ Mercury forum from John:

"the real point is that when people point out that our budget problems are largely a result of skyrocketing employee costs they aren't necessarily "blaming" or "scapegoating" the employees. They are simply pointing out a fact. We can argue about whose fault it is that public employee salary and pension costs are breaking the City's budget, but disingenuous labor advocates won't even engage in the discussion. Instead they play the victim card. That's when I lose patience with public employee unions. Selfish, selfish, selfish.
So it's very important for voters to examine the endorsements of their candidates for city council. If they continue to vote for candidates who are backed by public employee unions then we can expect the city's budget to remain on life support for years to come."

Posted by Blue Collar Public Worker
a resident of another community
on May 30, 2010 at 11:14 am

Peter
Good job, everyone has seen this side, your side of the issue, now what about the other side? That has been my argument all along right or wrong. I even asked Roy and Henry to link some of the info provided by PERS, they declined. The Pension Reform workers who went door to door asking for signitures were asked questions like how many Menlo Park Public Workers (not Safety, I know their not effected but they still get lumped in) who will be effected by this initiative have retired at over 100K per year? Some did not know, some gave hugh figures, along with other questions like this they did not know the answers to or gave wrong information. The answer is 1 so did people hear that before they signed?
BCPW

Posted by Menlo Voter
a resident of Menlo Park: other
on May 30, 2010 at 11:21 am

BCPW:

if the content of your argument for this debate you propose is the same as what you have presented here, what is the point? Roy, Pogo, Peter, et al have presented arguments backed up with links to many types of independent sources. You have presented nothing but information from PERS which clearly has an axe to grind. They are doing everything they can to make sure they are not blamed for their incompetence. The proof is in the pudding, they have gone back and told everyone they have to up their contributions. That money has to come from somewhere - either more taxes or cuts in services. If you could provide even one independent source that says PERS isn't in trouble and that these retirement benefits aren't unsustainable I'd be willing to listen to your "debate." I suspect you can't or you would have done so by now. So, again I ask, what's the point?

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 30, 2010 at 11:48 am

BCPW - You have given this discussion your best shot - thanks.

But what is needed from your side are solid facts from independent sources that refute the arguments which Pogo, Roy, I and others have made AND some clear convincing statements from local union leaders.

The silence of the local union leaders is very telling - they clearly have no way to defend the status quo.

Posted by Blue Collarf Public Worker
a resident of another community
on May 30, 2010 at 12:32 pm

The facts are people signed this thing without all the info. MV, Peter, POGO, Roy, Henry, why would'nt you be open and transparent. And don't come back with that who are you stuff, you know what I mean. Could it be some of your facts are unclear? Could it be that you lump in Safety and use that as a big red flag to make your point about unsustainability, along with other hype?
BCPW

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 30, 2010 at 12:40 pm

BCPW states:"The facts are people signed this thing without all the info."

Nobody stopped the opponents from informing the citizens before they signed the petition. And now that it will be on the ballot there will be an opportunity in the voter's guide for both pro and con statements - it will be very interesting to read with the opponents have to say - if they say anything.

And if you and others are really opposed to this initiative then you can draft a counter initiative and see if you can get enough signatures to get it on the ballot. I doubt that organized labor could come up with a counter initiative that would garner 3000 signatures.

Posted by POGO
a resident of Woodside: other
on May 30, 2010 at 4:13 pm

BCPW -

Why do you presume that people who signed the petition were ignorant? Please. Give people more credit than that. The initiative organizers were as straight about their objective as you could possibly be - there wasn't a scintilla of deception. Maybe voters just realize this current pension liability is unsustainable.

By my quick count, between you and Myth, there are about posts on this thread supporting the status quo. No one has limited your ability to get your side of the story out. And Mr. Carpenter is correct, you, public employees and union officials will have ample opportunity to sell your side of the story to voters.

It is, however, quite revealing that union officials are so silent. Perhaps there isn't another side to this story.

If there is, state you case and supporting evidence already. We're listening.

Posted by Blue Collar Public Worker
a resident of another community
on May 30, 2010 at 9:20 pm

MV
I would love to see him try in an open and in person debait. It's easy right he should be able to slap me around like it's nothing? Won't happen not in your life time. Do you really think if I had already spent all my info here on this forum I would challange him to an open public debait? He won't come out because he knows even if he wins (how ever you decide that) he will go home beat up and out of gas! By the way I don't remember him smacking me down, the only thing I remember is he was very angry and said he hated me, which I find interesting and frankly a little strange! But you guys are following him not me!
BCPW

Posted by Blue Collar Public Worker
a resident of another community
on May 31, 2010 at 4:54 pm

Wow Roy,
It's OK for you to name call? I have never called anyone names like you have. You "hate" me, I'm a "coward" and I'm going to apologize. Nope no way Roy, you don't want a open debate because it will only hurt you position and you are not interested in transparency. What your saying is you will not debate with anyone, correct? Or do they have to apologize too?
BCPW

Posted by Blue Collar Public Worker
a resident of another community
on May 31, 2010 at 6:54 pm

Peter,
News paper articles etc are not facts and I think I have been kinder than most. In a democracy there is transparency and in this case there has been none. That is why you and Roy live in opulent homes and I do not. That is why rich people just keep taking from others and I do not. But you never know the economy could turn around and all this will be a mute point. You will all be back to counting your money and I will be able to count on a good retirement that I earned. Roy will not come out and take this public no mater who the challenge is from. The more I think about it I won't ether. I won't expose my self to someone who says they "hate" me because they disagree with my viewpoint. That scares me even more than the threat of losing my pension.
BCPW

Posted by Menlo Voter
a resident of Menlo Park: other
on May 31, 2010 at 8:49 pm

BCPW:

your claim that you could lose your pension is bogus. Aside from the state or the municipality that you work for going bankrupt, or that PERS isn't telling the truth, there is no chance you lose your pension. So please come up with a realistic excuse for not debating. Personally, I think the real reason is you've got nothing. Do you have anything other than the PERS talking points? If not, you've got nothing. If you really are a civil servant it is virtually impossible to fire you. So please save us your BS. You've got your retirement - "a deal's a deal."

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 31, 2010 at 9:26 pm

From Independent Voter Network:
"CalPERS, the biggest public pension fund in the country, blinked last week after Schwarzenegger's speech targeting them, saying they would postpone a $600 million rate increase. In terms of the budget, CalPERS is problematic, because they have the legal authority to force the state or any municipality to make up any shortfall they are facing.

Schwarzenegger said eight years ago, the state was paying CalPERS $150 million a year. Now it's over $6 billion a year. This is not sustainable, and he said major pension reform must be part of the new budget or he won't sign it."

Posted by Blue Collar Public Worker
a resident of another community
on Jun 1, 2010 at 7:53 am

MV
Your wrong any agency can renegotiate retirement and benefits as for losing my job. Wrong again look around and see who's getting pink slips and terminated. Life time employment is not the truth, just like City of Menlo Park Worker retiring at 100K. By the way I am not the one who turned down the debate Roy is. However after careful refection I will turn him down even if he agrees. Why would someone say they "hate" you because you disagree about an issue like this? Here is the reason why Roy and the group didn't go after the Police and Fire. Web Link

Posted by Blue Collar Public Worker
a resident of another community
on Jun 1, 2010 at 7:10 pm

Yep,
That's Roy no body parts, well maybe the body parts of a mouse. So tell us more about the Company Dukman was talking about? I bet you hope that doesn't come out before the Nov 2, that could be embarrassing?
BCPW

"What are Unfunded Liabilities? They are future commitments or entitlements made today with no plan in place to pay for them when they are due. My goal in creating this blog is to deconstruct the myriad unfunded liabilities in our society and show how they could lead us down the path to a class war, a conflict between those members of society with unfunded entitlements and those who will be asked to pay for them."

Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Aug 10, 2010 at 6:18 am

U.S. Personal Income Took a Hit Last Year - particularly in the Bay area:

New data released by the Commerce Department show that personal income declined in 223 metro areas in 2009, increased in 134 others and was unchanged in only nine regions. "Even though prices declined last year -- down 0.2 percent from a year earlier as measured by the national price index for personal consumption expenditures -- incomes fell even more," the Wall Street Journal reported after analyzing the data.

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